Trade Protection Along Supply Chains

66 Pages Posted: 14 Jan 2021

See all articles by Chad P. Bown

Chad P. Bown

Peterson Institute for International Economics; Centre for Economic Policy Research (CEPR)

Paola Conconi

Centre for Economic Policy Research (CEPR); Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES)

Aksel Erbahar

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE); Tinbergen Institute

Lorenzo Trimarchi

University of Namur

Multiple version iconThere are 2 versions of this paper

Date Written: 2020

Abstract

During the last decades, the United States has applied increasingly high trade protection against China. We combine detailed information on US antidumping (AD) duties — the most widely used trade barrier — with US input-output data to study the effects of trade protection along supply chains. To deal with endogeneity concerns, we propose a new instrument for AD protection, which combines exogenous variation in the political importance of industries with their historical experience in AD proceedings. We find that tariffs have large negative effects on downstream industries, decreasing employment, wages, sales, and investment. Our baseline estimates for 1988-2016 indicate that, due to AD protection against China, around 1.8 million US jobs were lost in downstream industries, with no significant job gains in protected sectors. When we extend the analysis to measures introduced under President Trump, we find that around 500,000 jobs were lost during the first two years of his term. We also provide evidence of the mechanisms behind the negative effects of protection along supply chains: AD duties decrease imports and raise production costs for downstream industries.

JEL Classification: F130, D570

Suggested Citation

Bown, Chad P. and Conconi, Paola and Erbahar, Aksel and Trimarchi, Lorenzo, Trade Protection Along Supply Chains (2020). CESifo Working Paper No. 8812, Available at SSRN: https://ssrn.com/abstract=3765310 or http://dx.doi.org/10.2139/ssrn.3765310

Chad P. Bown

Peterson Institute for International Economics ( email )

1750 Massachusetts Avenue, NW
Washington, DC 20036
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Paola Conconi (Contact Author)

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES) ( email )

Ave. Franklin D Roosevelt, 50 - C.P. 114
Brussels, B-1050
Belgium
32 2 650 2345 (Phone)
32 2 650 4475 (Fax)

Aksel Erbahar

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Lorenzo Trimarchi

University of Namur ( email )

8 rempart de la vierge
Namur, 5000
Belgium

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