The new Trumpian tariffs are not the familiar protectionism G7 nations have applied for decades. Instead of shielding particular sectors, they wall off the entire American goods-producing economy from foreign competition. This is precisely the logic of 20th-century import substitution industrialisation – a strategy widely tried, and widely abandoned, because it raised costs, bred inefficiency, […]
The two most prominent arguments President Trump has advanced for his trade war – both during the early months of his second term, and for decades prior – are that protectionism will reduce the trade deficit and increase manufacturing employment. This column, taken from a CEPR book on the economic consequences of the second Trump […]
Industrial policy is increasingly implemented worldwide, with many policymakers and researchers highlighting its benefits. However, the cost of industrial policy remains less understood. Using Chinese firm-level data, this column shows that higher industrial subsidies raise the likelihood and severity of foreign anti-dumping and countervailing duties at each investigation stage. These retaliatory tariffs wipe out roughly […]
Euro zone business activity expanded in August, PMIs show. European stock markets fell slightly in early trading on Thursday, hovering just below recent highs, as traders avoided making big moves and waited for the Federal Reserve’s three-day annual Jackson Hole symposium. Jackson Hole starts on Thursday and focus will be on Fed Chair Jerome Powell’s […]
The US trade deficits will have to be reduced materially to prevent a crisis down the road. This column argues that fiscal consolidation, in association with a weaker dollar, appears to be the right way for the US to improve its trade balance. In addition, the US should pursue an outcome in which there is […]
Oil prices steadied on Monday, after falling more than 4% last week, as investors looked towards talks this week between the U.S. and Russia over the war in Ukraine. Brent crude futures slipped 14 cents, or 0.21%, at $66.45 a barrel by 11:15 a.m. EDT (1515 GMT). U.S. West Texas Intermediate crude futures fell 12 cents, […]
Investors weigh impact from Trump threats over Russian oil. Oil prices were little changed on Friday and heading for a weekly gain as investors weighed the impact of further tariffs and sanctions by U.S. President Donald Trump. Brent crude futures were down 35 cents, or 0.49%, at $71.35 a barrel by 1039 GMT. U.S. West […]
The US administration’s latest threat to impose sweeping new tariffs on many of its closest allies signals a renewed embrace of aggressive unilateralism and misunderstood economics. This column argues that the only effective response is a coordinated one. Unified retaliation by a coalition of like-minded countries made up of the EU, Canada, Mexico, Brazil, and […]
A key question in the context of a trade war is whether the burden of tariffs falls on foreign exporters or domestic importers. This column uses a firm-to-firm trade model with search frictions and French export data to study how cost shocks affect buying firms. It finds that while some buyers pay nothing, others face […]
While tariffs have been the most visible policy tool during the US-China trade war, anecdotal evidence points to the use of Chinese state-owned enterprises as a hidden lever of protectionism. This column presents new systematic evidence showing that state-owned enterprises drove a significant share of the decline in US exports to China in 2018–2019, especially […]
