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Shield the US from Imports! – GDP impacts on Finland and other European Union member states

Author

Listed:
  • Jyrki Ali-Yrkkö

    (The Research institute of the Finnish Economy (ETLA))

  • Tero Kuusi

    (The Research institute of the Finnish Economy (ETLA))

Abstract

We analyze the value-added impacts of rising U.S. protectionism on Finland and other EU countries using a hypothetical extraction method. Our results show that for many countries, trade to the U.S. represents more than 10% of the value added from exports to all countries. We quantify the value added generated by Finland and other EU countries through Mexico and China to the U.S. For the EU, we find that Mexico has recently been a more important trade route to the U.S. than China has. Furthermore, we analyze the value-added impacts of recent tariff increases and find that their relative impacts are smaller for Finland than for the EU. For both, the direct, static impacts are less than 1% of the GDP, while the dynamic effects may be greater. Our results also suggest that despite highly integrated global value chains, the indirect impact channels of the tariff measures through countries like China are not important enough to affect the Finnish and EU value added by more than 0.1 percentage point of GDP.

Suggested Citation

  • Jyrki Ali-Yrkkö & Tero Kuusi, 2020. "Shield the US from Imports! – GDP impacts on Finland and other European Union member states," Finnish Economic Papers, Finnish Economic Association, vol. 29(1), pages 52-80, Spring.
    • Handle: RePEc:fep:journl:v:29:y:2020:i:1:p:52-80
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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