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Outsourcing under Threat: Estimated Impact of Potential Tariffs on US Imports from Mexico

Sorin Burnete
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Sorin Burnete: Lucian Blaga University of Sibiu, Romania

Expert Journal of Economics, 2017, vol. 5, issue 3, 88-97

Abstract: In this paper, I discuss the effects of certain trade policy measures, mostly import tariffs, presently contemplated by the US government, aimed at enhancing domestic employment in a number of targeted industries. I intend to show that insofar as such measures restrain free trade among NAFTA member-countries, they run counter to a basic rule suggested by conventional theory, stating that, following changes in the tariff structure, resources will shift toward activities that enjoy the highest rate of effective protection. I try to demonstrate that erecting barriers against inside-NAFTA trade, aside from hurting industries that use outsourcing extensively, has little chances to create incentives for labor shifts in the desired direction.

Keywords: outsourcing; effective protection; labor mobility (search for similar items in EconPapers)
JEL-codes: F13 F15 F16 (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:exp:econcs:v:5:y:2017:i:3:p:88-97