The United States is a Small Country in World Trade

Christopher S. P. Magee and Stephen P. Magee

Review of International Economics, 2008, vol. 16, issue 5, pages 990-1004

Abstract: Despite being the largest country in world trade and thus presumably having high optimal tariffs, the United States has long had low and declining levels of protection. This paradox suggests that the United States is failing to exploit its monopsony power by levying optimal tariffs. Using data on world output and trade flows, we find that the United States is a small country in world trade in that its trade policies have negligible impacts on world prices. In the median manufacturing industry, US tariffs reduce world prices by only 0.12%. United States optimal tariffs are also typically small (3.6% in the median industry) and are lower than existing US tariffs in most industries. It is no puzzle that the United States has been a champion of free trade since the 1930s-the United States, like other small countries, benefits economically from tariff reductions. Copyright © 2008 The Authors. Journal compilation © 2008 Blackwell Publishing Ltd.

Date: 2008

Downloads: (external link)
http://www.blackwell-synergy.com/links/doi/10.1111/j.1467-9396.2008.00763.x link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:bla:reviec:v:16:y:2008:i:5:p:990-1004

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0965-7576

Access Statistics for this article

Review of International Economics is edited by E. Kwan Choi

More articles in Review of International Economics from Blackwell Publishing
Series data maintained by Christopher F. Baum ().