Retaliation through Temporary Trade Barriers

Retaliation through Temporary Trade Barriers
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Volume/Issue: Volume 2023 Issue 099
Publication date: May 2023
ISBN: 9798400241109
$20.00
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Exports and Imports , Economics- Macroeconomics , Taxation - General , Economics / General , Trade retaliation , Protectionism , Antidumping , Temporary Trade Barriers , IMF working paper 23/99 , comparative advantage sector , sector retaliation , trade barriers data , Trade barriers , Tariffs , Imports , Trade policy , Exports , Global

Summary

Are Temporary Trade Barriers (TTBs) introduced for strategic reasons? To answer this question, we construct a novel sectoral measure of retaliation using daily bilateral data on TTB responses in 1220 subsectors across a panel of 25 advanced and emerging market economies over 1989-2019. Stylized facts and econometric analysis suggest that within-year responses are more important in terms of intensity and frequency than commonly understood from the existing literature, which has tended to ignore them. We find that retaliation often consists of responses across many sectors and that same-sector retaliation is far from being the norm. In addition, we find that larger countries tend to retaliate more, and that retaliation is larger during periods of higher unemployment and when the trading partner targeted a domestic comparative advantage sector.