What is the proportion of tariff increases passed through into domestic price increases for steel, in the wake of the Section 232 actions. Some of the oft cited estimates pertain to early on in the trade war. With the benefit of additional data, we have more evidence confirming that — unlike the tariffs imposed on most other goods — pass through is less for steel.
Category Archives: Trade Policy
On Tariffs, and Large Country Assumptions
Suppose the US puts a 10% tariff on imports from a foreign country. Will import prices (inclusive of tariffs) rise 10%? It depends on the elasticity of supply of said imports. If the elasticity of supply is less than perfect, then import prices will rise less than 10%. To see this, consider the most basic tariff graph in the known universe (from Feenstra-Taylor) – if you can’t understand it, abandon all hope for comprehension of tariff policy.
Prices of Iron and Steel, and Trade Policy
I’m covering the impact of tariffs and quotas (general, antidumping, countervailing subsidy, section 232) and updated some graphs on steel employment, production, and prices. Here’s one particularly interesting one:
US Exports in the Wake of the Trade War
Compiling graphs for a trade course, and lo what did I see:
An Effective Anti-Inflationary Measure
As noted by Jeff Frankel:
In terms of what the president can actually control to reduce inflation, one neglected tool is trade policy. Former President Donald Trump put these tariffs on aluminum and steel, and everything we import from China — all kinds of goods. The tariffs raise prices to consumers. It seems to me a no-brainer to undo those barriers. Biden should be able to get China and other countries to reciprocally lower some barriers against us. But with or without that, removing tariffs could bring down consumer prices and prices to businesses for steel and aluminum and all kinds of inputs immediately. That’s the one thing that the government could most rapidly control.
Aggregate Real Imports and Exports, through the Trade War
From the advance GDP release:
Nonresidential Investment-GDP Is Low, but Higher than Just Before the Pandemic
In Jim’s review of the Q3 advance release, he noted disappointments in residential investment. What is also worrying is the deceleration in real business fixed investment growth, and the decline in equipment investment.
US-China Economic Relations on Talking Trade
I had the pleasure of speaking with UW’s Ian Coxhead and Sandi Siegel, President of MITA and of ME Dey, at Talking Trade last week about trade, direct investment and competition in technology production.
Wisconsin Manufacturing Employment and Manufactured Exports
Does Wisconsin’s fortunes — as a manufacturing heavy state — depend on what happens in the rest-of-the world? The answer is, partly, yes…