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Project Description

Summary:  View help for Summary
We study unanticipated tariffs in a setting with firm-to-firm supply relationships. Firms conduct costly searches and negotiate with potential suppliers that pass a reservation level of match productivity. Global supply chains form in anticipation of free trade. Then, the home government surprises with an input tariff. This can lead to renegotiation with initial suppliers or search for replacements. Calibrating the model's parameters to match initial import shares and the estimated responses to the US tariffs imposed on China, we find an overall welfare loss of 0.12% of GDP, with substantial contributions from changes in input sourcing and search costs.

Scope of Project

Subject Terms:  View help for Subject Terms global supply chains; global value chains; input tariffs; imported intermediate goods
JEL Classification:  View help for JEL Classification
      F12 Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
      F13 Trade Policy; International Trade Organizations
Geographic Coverage:  View help for Geographic Coverage United States of America
Universe:  View help for Universe United States of America. Import values and import tariffs.
Data Type(s):  View help for Data Type(s) administrative records data
Collection Notes:  View help for Collection Notes United States of America, import values and import tariffs, by foreign trade partner, product and month from January 2016 to October 2019.

Methodology

Response Rate:  View help for Response Rate Administrative records data.
Sampling:  View help for Sampling N/A
Data Source:  View help for Data Source United States Census Bureau.
Collection Mode(s):  View help for Collection Mode(s) other
Unit(s) of Observation:  View help for Unit(s) of Observation Importer-Exporter-Product-Year
Geographic Unit:  View help for Geographic Unit Importer-Exporter

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