Cascading Trade Protection: Evidence from the US
Aksel Erbahar and
Yuan Zi ()
No 16-079/VI, Tinbergen Institute Discussion Papers from Tinbergen Institute
In a world with increasingly integrated global supply chains, trade policy targeting upstream products has unintended consequences on their downstream industries. In this paper, we examine whether protection granted to intermediate manufacturers leads to petition for protection by their downstream users. We first provide a simple model based on the quantitative framework of Ossa (2014) which identifies the key factors and their interactions that cause cascading protection to motivate our empirical analysis. Then, we test our model by identifying the input-output relationships among the time-varying temporary trade barriers of the US using its detailed input-output tables. As predicted by the theory, we find that measures on imported inputs increase the likelihood of their downstream users' subsequent trade remedy petition over the 1988-2013 period. Moreover, our simulation exercise shows that cascading protection can cause additional welfare losses, and hence we propose that trade policy investigations should take vertical linkages into account.
Keywords: trade policy; protectionism; global value chains; anti-dumping (search for similar items in EconPapers)
JEL-codes: F1 F13 F14 F68 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int
Date: 2016-10-03, Revised 2016-10-10
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Journal Article: Cascading trade protection: Evidence from the US (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20160079
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