which should give you pause for thought about national-security-rationalized tariffs. Output stable, real prices up.
Category Archives: Trade Policy
Economic Policy Uncertainty and Risk Indices: March 5, 2018
Remember those quaint notions of policy uncertainty holding back growth? Well, what to make of recent moves in uncertainty and risk indices, given all the talk of trade wars?
Figure 1: US daily Economic Policy Uncertainty index from Baker, Bloom and Davis (dark blue), and seven day centered moving average (red). Orange shading denotes Trump Administration. Source: policyuncertainty.com, and author’s calculations.
An Event Study: How Do Equity Markets View National Security-based Trade Protection?
Figure 1: Dow Jones, 15 minute increments. Source: TradingEconomics.
Thanks, Trump: Wisconsin Cheese Edition
Mr. Trump has stated his intention of raising tariffs on steel and aluminum, based on national security grounds. See this post on the specious aspects of this argument, and this recent EconoFact column on the hits to the economy that would result from steel tariffs. The EU has hinted at striking at Wisconsin cheese in retaliation (Wisconsin is the second largest state exporter). This makes perfect sense from a strategic perspective – agriculture is America’s comparative advantage, and Wisconsin’s Representative Paul Ryan is Speaker.
Trundling to Trade War
With a national security fig leaf?
Trump’s Trade Deficit
A progress report (the deficit is increasing, if you were wondering…)
Figure 1: Trade balance in billions of dollars, SAAR (blue), and 12 month moving average (red). Orange denotes Trump administration. Source: BEA/Census December trade release, and FRED.
EconoFact: “Threats to U.S. Agriculture from U.S. Trade Policies”
Or, Does Mr. Trump feel lucky?
From EconoFact:
The agriculture sector in the United States depends upon exports for its vitality. Sales of U.S. agricultural products abroad are responsible for 20 percent of U.S. farm income, supporting more than one million American jobs on and off the farm, according to the U.S. Department of Agriculture. The three biggest buyers of American agricultural products are China, Canada, and Mexico. Yet trade with these three countries faces heightened uncertainty. The Trump Administration initiated a process of renegotiating the North American Free Trade Agreement (NAFTA) with Canada and Mexico, which includes the option of exiting the deal altogether. In addition, the United States has started a series of investigations of unfair practices leveled against China, some of which have already resulted in the imposition of new tariffs. These trade policy initiatives threaten agricultural exports both because of the potential increase of tariffs on exports to Canada and Mexico that would result from a withdrawal from NAFTA as well as the very real threat of retaliation in response to other proposed policies.
Figure 1: Share of total agricultural exports going to Mexico and Canada, by state. Agricultural exports defined as NAICS 111+112+311 (crops, livestock, and processed food). Source: Census via ITA and author’s calculations.
The entire article is here. More on agricultural sector fortunes here.
Farm Sector Prices and Income under Mr. Trump
So far, so-so.
World Economic Outlook Update: Upwardly Revised Growth, Rising Risks?
The IMF released an update to WEO today:
Continue reading
Making Mexico Pay for the Wall (Redux)
So we’re back to this again? From CNN:
“They can pay for it indirectly through NAFTA,” Trump said Thursday in an interview with The Wall Street Journal. “We make a good deal on NAFTA, and, say, ‘I’m going to take a small percentage of that money and it’s going toward the wall.’ Guess what? Mexico’s paying.”