Economics Dictionary of ArgumentsHome
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| Tariff impacts: Tariffs are taxes on imported goods. Their impacts include Higher prices for consumers and businesses using imported inputs; Reduced imports and potentially lower overall trade volume; Protection for domestic industries, but potentially making them less efficient; Risk of retaliatory tariffs from other countries, harming exports; Can lead to lower output, productivity, and increased unemployment in the long run. See also Tariffs, Tariff responsivity, Tariff history, Trade policy._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Dictionary of Arguments. | |||
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Florence Jaumotte on Tariff Impacts - Dictionary of Arguments
Jaumotte I 4 Tariff impacts/Eugster/Jaumotte/MacDonald/Piazza: Among mostly OECD countries, average tariff levels had declined from roughly 4.5% in the mid1990s to about 2% in 2015, with substantially more pronounced declines in cases such as India, China and many countries in Eastern Europe ((…)*. By 2008-09, when progress in trade liberalization slowed, tariffs generally constituted a very small share of the costs of international trade (e.g. Hummel, 2007(1); Escaith, 2017(2)). Falling tariffs, together with improved transportation and communication technologies have contributed to an increasingly tight integration of production (…). >Tariff history, >US Import Tariffs, >Tariff responsivity, >Tariff impacts, >Tariffs. Jaumotte I 5 Our paper** finds that upstream and downstream tariffs generally hurt economic activity. Coefficients are negative and significant for value added, labor productivity as well total factor productivity. Employment: Higher domestic protection however is generally found to be insignificant, bar a borderline-significant negative effect on employment. Employment/productivity: Higher tariffs on competitors are associated with higher value added and employment, not however improved productivity. Jaumotte I 14 Labour market: Micro studies of the effect of tariffs on labor markets have found negative, neutral and positive effects, depending on the setup or context. Various papers have highlighted that such differences in effects are not surprising. They have argued that the effect of both input and output tariffs depend on the extent a firm (or sector) is confronted with foreign competition or uses imported intermediate inputs (Amiti and Davis, 2011)(3), the differentiation of output (Luong, 2011)(4) or intermediate inputs (Tuan, 2011)(4) and the precise labor market rigidities (Helpman and Itskhoki)(5) 2010). Jaumotte I 15 The most comparable results to ours probably come from Feenstra and Sasahara (2018)(6) and Barattieri and Cacciatore (2020)(7). In Barattieri and Cacciatore (2020)(7), temporary trade barriers have insignificant effects on the protected sector but hurt industries further down in the value chain, consistent with our insignificant effects of domestic protection and negative effects of upstream tariffs. Feenstra and Sasahara (2018)(6) however partly disagree. Their results suggest that tariffs can increase employment in the protected sector at the expense of foreign exporter, conclusions which are not fully consistent with our results or the ones from Barattieri and Cacciatore (2020)(7).*** *For example, between 1995 and 2015 value added weighted tariffs on manufacturing goods declined from 32% to 11% in the case of India, from 20% to 7% for China and from 14% to 0.7% for Romania. ** Johannes Eugster, Florence Jaumotte, Margaux MacDonald, and Roberto Piazza. (2022). The Effect of Tariffs in Global Value Chains. IMF Working paper 22/40. International Monetary Fund. 1. Hummels, David 2007. "Transportation Costs and International Trade in the Second Era of Globalization," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 131-154 2. Escaith, Hubert, 2017. "Accumulated trade costs and their impact on domestic and international value chains" in Global Value Chain Development Report 2017 - Measuring And Analyzing The Impact Of GVCs on Economic Development, World Bank Group 2017 3. Amiti, Mary and Donald R. Davis, 2012. "Trade, Firms, and Wages: Theory and Evidence," Review of Economic Studies, Oxford University Press, vol. 79(1), pages 1-36. 4. Luong, Tuan Anh, 2011. "The Impact of Input and Output Tariffs on Firms' Productivity: Theory and Evidence," Review of International Economics, Wiley Blackwell, vol. 19(5), pages 821-835, November. 5. Helpman, Elhanan & Oleg Itskhoki, 2010. "Labour Market Rigidities, Trade and Unemployment," Review of Economic Studies, Oxford University Press, vol. 77(3), pages 1100-1137. 6. Feenstra, Robert C. & Akira Sasahara, 2018. "The ‘China shock,’ exports and U.S. employment: A global input-output analysis," Review of International Economics, Wiley Blackwell, vol. 26(5), pages 1053-1083, November. 7. Barattieri, Alessandro & Matteo Cacciatore, 2020. "Self-Harming Trade Policy? Protectionism and Production Networks," NBER Working Papers 27630, National Bureau of Economic Research, Inc._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. "Vs" indicates differences in content, not necessarily the chronological progression of a controversy. If a German edition is specified, the page numbers refer to this edition. |
Jaumotte I Florence Jaumotte Johannes Eugster Margaux MacDonald, The Effect of Tariffs in Global Value Chains. IMF Working paper 22/40. International Monetary Fund. Washington, D.C. 2022 |
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