Economics Dictionary of ArgumentsHome
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| Tariff history: Tariffs, taxes on imports or exports, have a long history, dating back to ancient Mesopotamia. Initially, they served primarily as a source of government revenue. Over time, their purpose expanded to include protecting domestic industries from foreign competition (protectionism) and as a tool for trade negotiations or retaliation. Historically, they've influenced national economies and global trade relations, sometimes leading to trade wars. See also Tariffs, Tariff impacts, Tariff revenue, Trade policies._____________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. – Lexicon of Arguments. | |||
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IMF Working Papers on Tariff History - Dictionary of Arguments
Rieth I 20 Tariff history/Boer/Rieth: The first major trade policy event in the sample* is the sixth round of multilateral trade negotiations by the members of the General Agreement on Tariffs and Trade (GATT), known as the Kennedy Round, which was concluded in 1967.** As a consequence, US average tariffs on dutiable imports decreased from 14% in 1967 to about 6% by 1975 (Irwin, 2017)(1). The cumulative shock series shows consecutive drops until the mid-1970s. From 1980 to 1984 the share of imports that was covered by some type of trade restrictions increased from 12% to 21% (Irwin, 2017)(1) and the shock series rises in the early 1980s. The US increased, for instance, tariffs on Japanese trucks in August 1980 and on motorcycles in 1983 (Feenstra, 1989)(2). Moreover, quotas in various industries like steel and textiles constituted a major element of US trade policy during this period. Another increase in tariffs was enacted in 1987 when the US imposed tariffs on computers, televisions, and power tools from Japan (Irwin, 2017)(1); the series displays another notable uptick. In the 1990s trade policy became less restrictive. In 1993 the North American Free Trade Agreement (NAFTA) was approved by Congress and the GATT Uruguay Round established the WTO. >GATT, >NAFTA. Rieth I 27 Tariff shocks: Since the mid-1980s, tariff shocks are an important driver of output and trade. First, the trade tensions with Japan, among others, lowered GDP and raised the trade balance until the mid-1990s. Thereafter, the trade liberalization of NAFTA in 1993, the creation of the WTO in 1995, and the accession of China to the WTO in 2001 generated a long boom. The estimates suggest that the shift to lower tariffs raised the output gap by up to 3 log points for nearly 20 years. This historic support only came to an end with the return to protectionism since 2016. The estimates paint a more favorable picture of the implications of China’s WTO accession for the US than the influential work of Autor et al. (2013(3), 2016(4)). The authors find that following this event wages and employment fell significantly in local US labor markets that are most exposed to import competition from China. We confirm* their results with general equilibrium estimates. Rieth I 28 A flip side of the free trade shocks and the increased capital demand is a persistent widening of the trade balance since the mid-1990s. Tariff shocks account for about one fourth of the deficit during the last 10 years. Alessandria and Choi (2021)(6) obtain a similar fraction in a calibrated two-country general equilibrium model with firm dynamics. Trade policy uncertainty shocks explain little of the output gap but are relevant for the trade balance. The back and forth of the trade relations with Japan in the 1980s and the NAFTA/GATT negotiations increased uncertainty and, hence, the trade balance. The completion of the agreements in the mid-1990s and China joining the WTO resolved a large part of that uncertainty, which raised US capital imports and trade deficits. >US Import Tariffs. * Lukas Boer and Malte Rieth (2024). The Macroeconomic Consequences of Import Tariffs and Trade Policy Uncertainty. IMF Working Paper 24/13. International Monetary Fund. ** Prior to the Kennedy Round, the 25% ‘chicken tax’ on trucks imported from Europe and imposed by President Johnson in 1964 is a tariff that is still active today (Lawrence, 2009)(5). 1. Irwin, D. A. (2017). Clashing over Commerce: A History of US Trade Policy. Markets and Governments in Economic History. University of Chicago Press, 1 edition. 2. Feenstra, R. (1989). Symmetric pass-through of tariffs and exchange rates under imperfect competition: An empirical test. Journal of International Economics, 27(1-2):25–45. 3. Autor, D. H., Dorn, D., and Hanson, G. H. (2013). The china syndrome: Local labor market effects of import competition in the united states. American economic review, 103(6):2121–2168. 4. Autor, D. H., Dorn, D., and Hanson, G. H. (2016). The china shock: Learning from labor-market adjustment to large changes in trade. Annual review of economics, 8:205–240. 5. Lawrence, R. (2009). The chickens have come home to roost. Accessed on September 7, 2021. 6.Alessandria, G. and Choi, H. (2021). The dynamics of the U.S. trade balance and real exchange rate: The J curve and trade costs? Journal of International Economics, 132:103511._____________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. If a German edition is specified, the page numbers refer to this edition. |
IMF Working Papers Rieth I Malte Rieth Lukas Boer The Macroeconomic Consequences of Import Tariffs and Trade Policy Uncertainty. IMF Working Paper 24/13. International Monetary Fund. Washington, D.C. 2024 |
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