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The Biggest Losers (and Winners) from U.S. Trade Liberalization

Author

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  • Kara M. Reynolds

    (Department of Economics, American University)

Abstract

Many development experts worry that continuing reductions of tariff levels in high-income countries will limit trade flows from developing countries that benefit from preferential trade programs because of “preference erosion.” Using a panel of U.S. import data between the years of 1997 and 2005, I find that reductions in preference margins will significantly diminish imports of some products, particularly from lowermiddle and low income countries; for example, a one percent reduction in the U.S. tariff on a product that is currently imported duty-free from developing countries will decrease imports of that product from lowermiddle countries by an average of 2.6 percent. However, many products produced by developing countries fail to qualify for preferential tariffs, thus a gradual reduction in all U.S. tariff rates is expected to have only a modest impact on trade flows from developing countries.

Suggested Citation

  • Kara M. Reynolds, 2007. "The Biggest Losers (and Winners) from U.S. Trade Liberalization," Working Papers 2007-06, American University, Department of Economics.
    • Handle: RePEc:amu:wpaper:0607
    DOI: 10.17606/bvbp-b017
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    Cited by:

    1. Shushanik Hakobyan, 2020. "GSP expiration and declining exports from developing countries," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 53(3), pages 1132-1161, August.
    2. Gnangnon, Sèna Kimm, 2022. "Effect of the utilization of non-reciprocal trade preferences offered by the QUAD countries on beneficiary countries' economic complexity," Journal of the Japanese and International Economies, Elsevier, vol. 65(C).
    3. Gnangnon, Sèna Kimm & Iyer, Harish, 2021. "Effect of Aid for Trade and Foreign Direct Investment Inflows on the Utilization of Unilateral Trade Preferences offered by the QUAD countries," EconStor Preprints 238211, ZBW - Leibniz Information Centre for Economics.
    4. Gnangnon, Sèna Kimm, 2022. "Effect of the Duty-Free Quota-Free Market access Schemes in favour of Least developed countries' Products on the Volatility of the Utilization Rate of these Schemes," EconStor Preprints 260567, ZBW - Leibniz Information Centre for Economics.
    5. Maria Cipollina & Federica Demaria, 2020. "The Trade Effect of the EU’s Preference Margins and Non-Tariff Barriers," JRFM, MDPI, vol. 13(9), pages 1-20, September.

    More about this item

    Keywords

    Generalized System of Preferences; Preference Erosion; Preferential Tariffs;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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