Shouldn’t we win the trade war before beginning a shooting war?

From ASSA, take a look at the first paper’s abstract:

United States-China Trade Relationships

Hosted By: CHINESE ECONOMIC ASSOCIATION IN NORTH AMERICA
  • Chair: Heiwai TangJohns Hopkins University and Hong Kong University

 

Quantifying the United States-China Trade Conflicts

Jiandong JuTsinghua University
Hong MaTsinghua University
Zi Wang, Shanghai University of Finance and Economics
Xiaodong Zhu, Toronto University

 

Structural Change and Global Trade

Logan LewisFederal Reserve Board
Ryan MonarchFederal Reserve Board
Michael SposiSouthern Methodist University and Federal Reserve Bank of Dallas
Jing ZhangFederal Reserve Bank of Chicago

Input Trade and Policy Uncertainty: Theory and Evidence from Chinese Firms

Kyle Handley, University of Michigan
Nuno Limao, University of Maryland
Rodney Ludema, Georgetown University
Zhi Yu, Renmin University of China

Using Equity Market Reactions to Infer Exposure to Trade Liberalization

Andrew Greenland, Elon University
Mihai Ion, University of Arizona
John Lopresti, College of William and Mary
Peter K. Schott, NBER and Yale University

Discussant(s)
Fernando Parro, Pennsylvania State University
Steffan H. Qi, Hong Kong Baptist University
Deborah Swenson, University of California-Davis
Colin Hottman, Federal Reserve Board

 

 

From NBER today:

Who’s Paying for the US Tariffs? A Longer-Term Perspective

Mary AmitiStephen J. ReddingDavid E. Weinstein

NBER Working Paper No. 26610
Issued in January 2020

Using data from 2018, a number of studies have found that recent U.S tariffs have been passed on entirely to U.S. importers and consumers. These results are surprising given that trade theory has long stressed that tariffs applied by a large country should drive down foreign prices. Using another year of data including significant escalations in the trade war, we find that U.S. tariffs continue to be almost entirely borne by U.S. firms and consumers. We show that the response of import values to the tariffs increases in absolute magnitude over time, consistent with the idea that it takes time for firms to reorganize supply chains. We find heterogeneity in the responses of some sectors, such as steel, where tariffs have caused foreign exporters to drop their prices substantially, enabling them to export relatively more than in sectors where tariff passthrough was complete.

 

26 thoughts on “Shouldn’t we win the trade war before beginning a shooting war?

  1. pgl

    It is clear that in the Trump v. China trade war, Trump is losing badly. WHY? Because he is really stupid and advised by people who may be even more stupid.

    Trump v. Iran in a real war? OK – Trump is a draft dodger so who is advising him on this neocon nitwit mission? A lying and arrogant blow hard – Mike Pompeo. Iran is already mocking Pompeo as an “arrogant clown”. Alas they are right. Look the neocons created a mess with that March 2003 invasion of Iraq. And this Iran is a lot more capable than Saddam Hussein could ever imagine. So alas this war will turn out really badly for the US. Even more badly than 2003 or the stupid trade war.

    BTW – the news this afternoon is that we are being asked to leave Iraq by the Shia dominated government. It seems Iran is already winning before they have even taken their first real act.

    Reply
    1. ilsm

      Pompeo is a loyal, ‘talking head’ propagandist, I do not conclude much more. In his scripted appeal at 1000 this AM Pompeo said Zarif don’t get a visa to go the UN because he is a “propagandist”, my head nearly exploded.

      As to 52 “high value” targets Iran I suggest thinking North Vietnam. Look how that bombing went. As well as think of Shi’a militia in Iraq both the open and the not yet active as VC…….. and Shi’a draftees in the US’ puppet Iraq regular army.

      Hundreds of US serviceman (17% per pentagon “assessment”) killed by Iraqi Shi’a guerillas during the occupation) 83% were killed by Iraq’s Sunni nut jobs the source of ISIS funding by US partners like Saudi Arabia and GCC.

      I agree with Andrew Bacevich: US military has been used for over 40 years and had made a huge mess of the Middle East, the Persian Gulf in particular. Time for trying something different, if the pentagon money can be pushed aside to preparing to war with China (more dumb than invading Iraq but….).

      US “interests” in Iraq…. seems a little US military kassern near Mosul is just like Pearl Harbor!

      Reply
  2. pgl

    The last paper should be especially interesting for those of us who enjoyed your event study approach to analyzing the impact of soybean tariffs:

    “Using Equity Market Reactions to Infer Exposure to Trade Liberalization”.

    Now let’s just hope CoRev does his homework before taking this paper on.

    Reply
  3. pgl

    “Who’s Paying for the US Tariffs? A Longer-Term Perspective”

    Oh wait – bonus coverage thanks to this NBER publication. So if I get this straight – on most of those Trump tariffs, US consumers bear nearly 100% of the burden as little to none are borne by those Chinese suppliers. Just the opposite of what those Trump tweets claim.

    One exception – the steel tariffs are partly borne by European steel export firms. Which means the steel workers in Western Pennsylvania are not getting as much protection as they had hoped. I guess Trump messed up on that one too!

    Does he get anything right? I know, I know. An easy rhetorical question!

    Reply
  4. Not Trampis

    In either situation your President who acts like a child does nothing and has no respect for rules based systems.
    This also shows he is no conservative. Might is right in his small opinion.

    I suggest this is a large reason to worry about the international economic situation.

    Reply
  5. Not Trampis

    and how come my comments are moderated?

    I am taking this to the moderation committee as discrimination against Awzies

    Reply
    1. Moses Herzog

      It’s usually he hasn’t got around to it. 98% of the time it will drop along with other comments. You should think of it as like a shift change at McDonalds or something. You ordered your burger right at the shift change. I have been “filtered” but I’ve usually given good reason in the vulgarity dept.

      Reply
    2. Moses Herzog

      Academics are hypersensitive on how they are judged on these things and how it reflects on them (as they should be in the current environment). Then take your average Asian academic and you can multiply that hypersensitivity by about 3 multiples. You can tell from my comments about where Menzie’s line is, because I have pushed it as far as you can push it. Menzie has been exceedingly tolerant at allowing those things in, and in fact gives me a longer leash than Prof Hamilton does. I hesitate conceding that fact on the basis Menzie may truncate part of my leash. But he’s pretty consistent. I will defend Menzie on that cause when I am not in one of my fidgety moods.

      Reply
    1. Moses Herzog

      5-star comment by Willie.

      I am still absolute resolute the the killing of the two Iranian leaders (yes, one may have been ethnically Iraqi, but he was an Iranian geopolitical tool) may very well have been a good action. But the question still remains what were donald trump’s underlying reasons for the action??—the timing is way more than “suspect”.

      Reply
      1. baffling

        i have no doubt this decision was viewed as a distraction-that is the trump mode of operation. but unfortunately it was also an assassination. yet another example of how trump continues to lower the common denominator of acceptable behavior. lies have become acceptable. now political assassinations have become acceptable. it is not a good path to follow.

        Reply
        1. Barkley Rosser

          People usually bring up “Wag the Dog” in this context, but Dana Milbank in WaPo says this is a case of “Wag the Hippo.”

          Reply
  6. Moses Herzog

    Off-topic
    As usual, I’m happy to be educated here, but if Ivanka Trump gives a speech at CES, shouldn’t CES be the ones getting most of the heat for giving her a platform?? She did not hold a gun to their head, did she?? That is CES’s mistake, no one else’s. This reminds me of Julie Andrews carting around her daughter to all her interviews, or Chelsea Clinton tagging along with Mommy to late night shows. You know, WHO makes the decisions to have them on when they have nothing to contribute??

    Reply
    1. Baffling

      Ces should have reserved that slot for a woman who actually impacts technology in a meaningful way. Ivanka does not do this. Ces officials are simply bowing to the emperor. I would rather hear from somebody who understands technology and where it is going. Ivanka is a waste of time on that platform.

      Reply
    1. Willie

      I do not expect a Great Recession meltdown coming up. We have done some dumb things, but it is too soon for them to be so dramatic in their detrimental effect. My observation from the Fed’s chart is the spike occurred after the meltdown, which makes it a lagging indicator with little predictive value other than an indication that things are really screwed up. Previous recessions did not have the same bank run indications.

      Reply
      1. macroduck

        Yep. The Great Recession involved massive financial disintermediation, the Fed bridging the gap with a Baskin-Robbins of lending facilities. There is no disintermediation so far, so no common factor to indicate trouble similar to last time.

        Reply

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