Trade policy uncertainty

China has experienced tremendous growth in its exports to the world since the 1990’s. Its exports to the world rose from just 2 percent of the world’s share to close to 13 percent from 1990 to 2017. Its exports to the United States increased even more during the same period, from 3 percent to 33 percent. China’s WTO accession, awarding China permanent most favored nation (MFN) status, led to this dramatically increase in exports through a reduction in the US trade policy uncertainty (TPU). This report first reviews the sources of gains from trade and the gravity equation to estimate trade flow between countries. Second, this report illustrates why optimal tariffs are not zero and the effects of tariffs on trade volumes and import prices. TPU arises when countries have the power to increase tariffs. This report reviews the recent literature on the effects of reducing TPU on export growth, export prices, and product varieties. Handley and Limão (2017a) find that over one third of the export growth from China to U.S. after China’s accession to the WTO is accounted by the reduction in TPU between China and US.

Grantor dc:publisher

Kansas State University

Year dc:date.issued

2019

Author dc:creator

• Duan, Chenchen

• Trade policy
• Uncertainty
• Tariff

Statement dc:rights

• © the author. This Item is protected by copyright and/or related rights. You are free to use this Item in any way that is permitted by the copyright and related rights legislation that applies to your use. For other uses you need to obtain permission from the rights-holder(s).

Licence dc:rights.uri

• http://rightsstatements.org/vocab/InC/1.0/

Language dc:language.iso

en_US

Handle dc:identifier.uri

http://hdl.handle.net/2097/39642

OAI record oai:identifier

https://krex.k-state.edu/server/oai/request?verb=GetRecord&metadataPrefix=dim&identifier=oai%3Akrex.k-state.edu%3A2097%2F39642