IDEAS home Printed from https://ideas.repec.org/p/ags/pugtwp/333116.html
   My bibliography  Save this paper

Regional Integration and Global Response to US Protectionism

Author

Listed:
  • Robinson, Sherman
  • Thierfelder, Karen

Abstract

US trade policy in the Trump administration is protectionist, raising tariffs outside of WTO rules, threatening trade wars, withdrawing from existing trade agreements, and negotiating new bilateral trade deals rather than free trade agreements. The reaction of the rest of the world has been to support the WTO rules-based trading system and to pursue new and expanded regional trade agreements that do not include the US. The result may be US disengagement from the world trading system, with countries diverting trade around the US. Currently, international trade is dominated by three interconnected regional economies (ICREs): Europe, East and Southeast (E&SE) Asia, and North America. They each account for about a quarter of global GDP but differ in their shares of global exports. Europe has the largest share (37%), followed by E&SE Asia (28%) and North America (14%). The implication is that the US is no longer hegemonic in the world trading system and that the world can continue regional integration and globalization without the US. We use a global computable general equilibrium (CGE) model to analyze changes in trade and production patterns for a variety of scenarios, including US trade wars. We find that adjustment to US disengagement is feasible—the changes in trade shares as countries divert trade are modest and achievable, with very little impact on the volume of global trade. If the US engages in trade wars with major partners, the best response for other trade partners is to sit out the trade war, accept higher US tariffs, and gain markets from global trade diversion around the US. Finally, because of indirect effects, widespread tariffs fail to benefit the protected sectors—a fallacy of composition in a protectionist trade policy.

Suggested Citation

  • Robinson, Sherman & Thierfelder, Karen, 2019. "Regional Integration and Global Response to US Protectionism," Conference papers 333116, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:333116
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/333116/files/9429.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. L Alan Winters, 2004. "Trade Liberalisation and Economic Performance: An Overview," Economic Journal, Royal Economic Society, vol. 114(493), pages 4-21, February.
    2. Christoph Boehringer & Edward Balistreri & Thomas Rutherford, 2018. "Quantifying Disruptive Trade Policies," Working Papers V-415-18, University of Oldenburg, Department of Economics, revised Nov 2018.
    3. Douglas A. Irwin, 2017. "Clashing over Commerce: A History of US Trade Policy," NBER Books, National Bureau of Economic Research, Inc, number irwi-2.
    4. William R. Cline, 2004. "Trade Policy and Global Poverty," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 379, April.
    5. Will Martin & Kym Anderson, 2006. "Agricultural Trade Reform and the Doha Development Agenda," World Bank Publications - Books, The World Bank Group, number 6889.
    6. Marc J. Melitz & Giancarlo I. P. Ottaviano, 2021. "Market Size, Trade, and Productivity," World Scientific Book Chapters, in: Firms and Workers in a Globalized World Larger Markets, Tougher Competition, chapter 4, pages 87-108, World Scientific Publishing Co. Pte. Ltd..
    7. Chad P. Bown & Douglas Irwin, 2018. "What Might a Trump Withdrawal from the World Trade Organization Mean for US Tariffs?," Policy Briefs PB18-23, Peterson Institute for International Economics.
    8. Robinson, Sherman & Thierfelder, Karen, 2019. "Global adjustment to US disengagement from the world trading system," Journal of Policy Modeling, Elsevier, vol. 41(3), pages 522-536.
    9. Robinson, Sherman & Thierfelder, Karen, 2002. "Trade liberalisation and regional integration: the search for large numbers," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 46(4), pages 1-20.
    10. Devarajan, Shantayanan & Lewis, Jeffrey D & Robinson, Sherman, 1993. "External Shocks, Purchasing Power Parity, and the Equilibrium Real Exchange Rate," The World Bank Economic Review, World Bank, vol. 7(1), pages 45-63, January.
    11. Kutlina-Dimitrova,Zornitsa & Lakatos,Csilla, 2017. "The global costs of protectionism," Policy Research Working Paper Series 8277, The World Bank.
    12. Jagdish Bhagwati & Arvind Panagariya & T. N. Srinivasan, 1998. "Lectures on International Trade, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262522470, April.
    13. Douglas A. Irwin, 2017. "Introduction to "Clashing over Commerce: A History of US Trade Policy"," NBER Chapters, in: Clashing over Commerce: A History of US Trade Policy, pages 1-27, National Bureau of Economic Research, Inc.
    14. Irwin, Douglas A., 2017. "Clashing over Commerce," University of Chicago Press Economics Books, University of Chicago Press, number 9780226398969, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Robinson, Sherman & Thierfelder, Karen, 2019. "Global adjustment to US disengagement from the world trading system," Journal of Policy Modeling, Elsevier, vol. 41(3), pages 522-536.
    2. Shantayanan Devarajan & Delfin S. Go & Csilla Lakatos & Sherman Robinson & Karen Thierfelder, 2021. "Traders' dilemma: Developing countries' response to trade wars," The World Economy, Wiley Blackwell, vol. 44(4), pages 856-878, April.
    3. Fiorentini, Riccardo, 2020. "The Persisting US Trade Deficit: Is Protectionistm the Right Answer?," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 73(2), pages 155-186.
    4. Funke, Michael & Wende, Adrian, 2022. "Modeling semiconductor export restrictions and the US-China trade conflict," BOFIT Discussion Papers 13/2022, Bank of Finland Institute for Emerging Economies (BOFIT).
    5. Kevin L. Kliesen & John A. Tatom, 2018. "Is American manufacturing in decline?," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 53(3), pages 107-123, July.
    6. World Bank, "undated". "World Bank East Asia and Pacific Economic Update, April 2020," World Bank Publications - Reports 33477, The World Bank Group.
    7. Nicole Wu, 2023. "“Restrict foreigners, not robots”: Partisan responses to automation threat," Economics and Politics, Wiley Blackwell, vol. 35(2), pages 505-528, July.
    8. David Autor & David Dorn & Gordon Hanson & Kaveh Majlesi, 2020. "Importing Political Polarization? The Electoral Consequences of Rising Trade Exposure," American Economic Review, American Economic Association, vol. 110(10), pages 3139-3183, October.
    9. Nathaniel Lane, 2020. "The New Empirics of Industrial Policy," Journal of Industry, Competition and Trade, Springer, vol. 20(2), pages 209-234, June.
    10. Nina Boberg-Fazlic & Markus Lampe & Maja Uhre Pedersen & Paul Sharp, 2021. "Pandemics and protectionism: evidence from the “Spanish” flu," Palgrave Communications, Palgrave Macmillan, vol. 8(1), pages 1-9, December.
    11. Blanchard, Emily & Willmann, Gerald, 2022. "Unequal gains, prolonged pain: A model of protectionist overshooting and escalation," Journal of International Economics, Elsevier, vol. 135(C).
    12. Bernard M. Hoekman & Petros C. Mavroidis & Douglas R. Nelson, 2023. "Geopolitical competition, globalisation and WTO reform," The World Economy, Wiley Blackwell, vol. 46(5), pages 1163-1188, May.
    13. Robert Wolfe, 2022. "Is using trade policy for foreign policy a “SNO job”? On linkage, friend-shoring and the challenges for multilateralism," RSCAS Working Papers 2022/74, European University Institute.
    14. Nadia Belhaj Hassine & Véronique Robichaud & Bernard Decaluwé, 2010. "Agricultural Trade Liberalization, Productivity Gain and Poverty Alleviation: a General Equilibrium Analysis," Cahiers de recherche 1022, CIRPEE.
    15. Gonzalez–Mellado, Aida, 2006. "Assessment of Poverty Impacts of Trade Liberalization by Integration of Household Analysis in CGE Models: Possibilities and Perspectives," Conference papers 331521, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    16. Kris James Mitchener & Kevin Hjortshøj O'Rourke & Kirsten Wandschneider, 2022. "The Smoot-Hawley Trade War," The Economic Journal, Royal Economic Society, vol. 132(647), pages 2500-2533.
    17. Seohee Park, 2023. "Semiconductors at the Intersection of Geoeconomics, Technonationalism, and Global Value Chains," Social Sciences, MDPI, vol. 12(8), pages 1-16, August.
    18. John Gilbert, 2009. "Agricultural Trade Reform Under Doha and Poverty in India," Working Papers 200903, Utah State University, Department of Economics and Finance, revised 28 Jun 2009.
    19. Rita Cappariello & Michele Mancini, 2019. "US trade policy in numbers: how exposed is the EU?," Questioni di Economia e Finanza (Occasional Papers) 528, Bank of Italy, Economic Research and International Relations Area.
    20. Ole Boysen & Alan Matthews, 2008. "The Impact of Developed Country Agricultural Trade Liberalization on Poverty: A Survey," Working Papers hal-03416399, HAL.

    More about this item

    Keywords

    International Relations/Trade;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:pugtwp:333116. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/gtpurus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.