Trade Wars and Trade Talks with Data
- (pp. 4104-46)
Abstract
How large are optimal tariffs? What tariffs would prevail in a worldwide trade war? How costly would a breakdown of international trade policy cooperation be? And what is the scope for future multilateral trade negotiations? I address these and other questions using a unified framework which nests traditional, new trade, and political economy motives for protection. I find that optimal tariffs average 62 percent, world trade war tariffs average 63 percent, the government welfare losses from a breakdown of international trade policy cooperation average 2.9 percent, and the possible government welfare gains from future multilateral trade negotiations average 0.5 percent. (JEL F12, F13, O19)Citation
Ossa, Ralph. 2014. "Trade Wars and Trade Talks with Data." American Economic Review, 104 (12): 4104-46. DOI: 10.1257/aer.104.12.4104Additional Materials
JEL Classification
- F12 Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- F13 Trade Policy; International Trade Organizations
- O19 International Linkages to Development; Role of International Organizations