The asymmetric effects of tariffs on intra-firm trade and offshoring decisions

Federico Diez

No 10-4, Working Papers from Federal Reserve Bank of Boston

Abstract: This paper studies the effects of tariffs on intra-firm trade. Building on the Antrs and Helpman (2004) North-South theoretical framework, I show that higher Northern tariffs reduce the incentives for outsourcing and offshoring, while higher Southern tariffs have the opposite effects. I also show that increased offshoring and outsourcing imply an increase in the ratio of Northern intra-firm imports to total imports, which is an empirically testable prediction. Using a highly disaggregated dataset of U.S. (the North) imports and relevant tariffs, I find robust evidence to support the model's predictions.

Keywords: Tariff; Contracting out; Trade (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-bec and nep-int
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Citations: View citations in EconPapers (6)

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Journal Article: The asymmetric effects of tariffs on intra-firm trade and offshoring decisions (2014)
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