Search

Begin New Search Topic Tariffs Political Geography Europe

1. Destined for Division? US and EU Responses to the Challenge of Chinese Overcapacity

Author:
Salih Bora, Mary Lovely, and Luis Simón
Publication Date:
04-2025
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
Heightened concerns about China’s exports have intensified competitive pressures on producers and compelled American and European policymakers, government officials, and political leaders to try to counteract those concerns. President Donald Trump’s decision to raise tariffs on China by 145 percent is the most recent—and arguably most dramatic—example of broader concerns about Chinese overcapacity. The clash with China is particularly evident in sectors that US and European leaders have deemed essential for growth and security, charging that Chinese industrial subsidies, rather than comparative advantage, are the basis for the country’s export success. However, the European Union and the United States have taken different approaches to resolve tensions with China. The European Union seeks, at least for now, to preserve and adhere to global trading rules. By contrast, the United States has acted unilaterally (even before the second Trump administration) to defend its domestic production by engaging in a trade confrontation with China that, together with China’s retaliation, has rattled global financial markets. This Policy Brief explores these EU-US divisions, their reflection on trade and industrial policy, and prospects for coordinated action against Chinese overcapacity. The authors argue that the European Union can take the lead toward a resolution within the rules-based system while maintaining an open door to future US participation.
Topic:
European Union, Tariffs, Exports, and Donald Trump
Political Geography:
China, Europe, North America, and United States of America

2. VIP Pass to Markets: When Customs Certification Helps Firms to Face NTMs

Author:
Charlotte Emlinger and Houssein Guimbard
Publication Date:
10-2024
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
This paper aims to assess how trade facilitation measures reduce the costs induced by non-tariff measures (NTMs). It focuses on the Authorized Economic Operator (AEO) certification, a firm-level trade facilitation measure defined by the World Customs Organization. This status allows firms to benefit from customs simplifications at the border, reduced physical and document-based controls, and priority treatment. We use an original and exhaustive dataset of French firms certified as AEO by the European Customs, merged with firm level trade from the French Customs. Our empirical strategy is to compare the export structure of firms before and after their certification to see whether the impact of NTMs on trade can be reduced by trade facilitation measures. Our results show that the AEO status enhances trade, but only when facing NTMs in the destination market. This confirms that some of the trade costs generated by NTMs are administrative in nature and can be reduced by pre-certifying firms. Our conclusion is informative about the kind of trade cost reductions that could be achieved by trade agreements that go beyond tariff reductions, without hindering the level of actual regulation.
Topic:
Markets, Economy, Tariffs, Trade, and Customs
Political Geography:
Europe and France

3. The Rise of Fragmentation. A New Economic Security Era?

Author:
Alessandro Gili and Filippo Fasulo
Publication Date:
09-2024
Content Type:
Special Report
Institution:
Italian Institute for International Political Studies (ISPI)
Abstract:
Multiple crises have shaken the foundations of the global economy, and the resulting instability has yet to recover. Instead, it has led to increasing fragmentation along political and ideological lines. The current geoeconomic order is increasingly defined by the use of advanced trade defense and economic security tools, such as tariffs, trade barriers, sanctions, and export restrictions, which have become more sophisticated. Major economies are adapting to this new reality by shaping their own definitions of economic security, particularly to safeguard critical and high-tech sectors. The EU, the US, and China are each calibrating their economic security strategies, seeking a balance between openness and protection that maximizes their respective advantages. However, in this shifting international landscape, new actors are emerging with the potential to influence the global balance of power. What type of "new globalization" is emerging? Could economic security tools become the new normal in the global economy? What are the key economic security strategies adopted by the world's leading economies?
Topic:
European Union, Economy, Ideology, Tariffs, Trade, Economic Security, Instability, Fragmentation, and Geoeconomics
Political Geography:
China, Europe, and United States of America

4. How the European Union should respond to Trump’s tariffs

Author:
Ignacio Garcia Bercero, Petros C. Mavroidis, and André Sapir
Publication Date:
12-2024
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
President-elect Trump has threatened to increase United States tariffs to 60 percent on imports from China and 10 percent to 20 percent on imports from other trading partners, including the European Union. In doing so the US would be ignoring its World Trade Organisation commitments and would also rollback the substantial liberalisation that has taken place during the past 80 years, with a potentially major negative impact on the world economy. In response to this threat, the EU should pursue a three-pronged strategy. First, the EU should engage bilaterally with the US to seek to avoid the imposition of tariffs. This could include an offer to consider measures on facilitation of bilateral trade and on economic security cooperation, while making clear that any trade measures adopted by the EU will be consistent with WTO rules. This offer should be backed up with a credible threat of retaliation that could be implemented if the US decides to impose tariffs on EU exports. Retaliation could take the form of a negative list – the EU would increase its tariffs on all US exports to the same level as the US tariffs, except for products imported from the US identified as crucial for the EU. Second, the EU should act to preserve a functioning rules-based multilateral trading system, including on dispute settlement, and should continue to pursue WTO reform. To this end, the EU should build a coalition of countries including key players from the Global North and the Global South ready to lead in this endeavour. Third, the EU should expand its network of bilateral and regional preferential trade agreements. The priority should be the ratification of the agreement with Mercosur, but the EU should also aim to improve trade relations with the United Kingdom and Switzerland and to further strengthen partnerships in the Indo-Pacific region, and with Africa.
Topic:
European Union, Tariffs, Trade Policy, and Donald Trump
Political Geography:
Europe and United States of America

5. Trade Liberalization, Collective Bargaining and Workers: Wages and Working Conditions

Author:
Bastien Alvarez, Gianluca Orefice, and Farid Toubal
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
Using large scale data on Eastern European workers, we show significant and sizable deteriorations of their wages and working conditions in regions that faced large tariff liberalization and strong erosion of collective bargaining over the process of accession to the European Union. Import tariffs liberalization reduces workers' wages. The deterioration of working conditions is mostly driven by increased labor demand due to the improvement of Eastern countries' international market access. The erosion of collective bargaining worsens wages and working conditions.
Topic:
Labor Issues, Tariffs, Collective Bargaining, and Wages
Political Geography:
Europe and Eastern Europe

6. Trade Liberalization along the Firm Size Distribution: The Case of the EU-South Korea FTA

Author:
Sonali Chowdhry and Gabriel Felbermayr
Publication Date:
02-2021
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
In 2011, the EU-South Korea Free Trade Agreement (EUKFTA) entered into force. With its focus on non-tariff barriers (NTBs), it is a leading example of a deep new generation agreement. Using detailed French customs data for the period 2000 to 2016, we investigate how exporters of different size have gained from the agreement. Applying a diff-in-diff strategy that makes use of the rich dimensionality of the data, we find that firms with larger pre-FTA sizes benefit more from the FTA than firms at the lower end of the size distribution, both at the extensive (product) and the intensive margins of trade. The latter finding is in surprising contrast to leading theories of firm-level behavior. Moreover, we find that our main result is driven by NTB reductions rather than tariff cuts. In shedding light on the distributional effects of trade agreements within exporters, our findings highlight the need for effective SME-chapters in FTAs.
Topic:
Economics, International Political Economy, Treaties and Agreements, Tariffs, and Trade
Political Geography:
Europe, South Korea, and European Union

7. Tariffs and Monetary Policy: A Toxic Mix

Author:
Michael D Bordo and Mickey D. Levy
Publication Date:
01-2020
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
The ratcheting up of tariffs and the Fed’s discretionary conduct of monetary policy are a toxic mix for economic performance. Escalating tariffs and President Trump’s erratic and unpredictable trade policy and threats are harming global economic performance, distorting monetary policy, and undermining the Fed’s credibility and independence. President Trump’s objectives to force China to open access to its markets for international trade, reduce capital controls, modify unfair treatment of intellectual property, and address cybersecurity issues and other U.S. national security issues are laudable goals with sizable benefits. However, the costs of escalating tariffs are mounting, and the tactic of relying exclusively on barriers to trade and protectionism is misguided and potentially dangerous. The economic costs to the United States so far have been relatively modest, dampening exports, industrial production, and business investment. However, the tariffs and policy uncertainties have had a significantly larger impact on China, accentuating its structural economic slowdown, and are disrupting and distorting global supply chains. This is harming other nations that have significant exposure to international trade and investment overseas, particularly Japan, South Korea, and Germany. As a result, global trade volumes and industrial production are falling. Weaker global growth is reflected in a combination of a reduction in aggregate demand and constraints on aggregate supply.
Topic:
International Trade and Finance, Monetary Policy, Economic Growth, Tariffs, and Industry
Political Geography:
Japan, China, Europe, Asia, South Korea, Germany, North America, and United States of America

8. The basis for strong US-European relations endures: Continuity in institutions and interests

Author:
Christopher Kojm
Publication Date:
10-2019
Content Type:
Working Paper
Institution:
Finnish Institute of International Affairs (FIIA)
Abstract:
President Donald Trump’s words and actions are disrupting US-European relations. Yet the structural basis for strong transatlantic ties endures. Key institutions and forces involved in the making of US foreign policy exhibit more continuity than change with respect to transatlantic relations. Congress strongly supports NATO. It agrees with the President on the need for greater burden-sharing, yet opposes the President’s harsh and gratuitous attacks on the Alliance. Executive Branch Departments, especially the Department of Defence, have longstanding institutional ties with European counterparts. High-level meetings, defence cooperation agreements, military exercises, and relationship-building continue without interruption. The US business community strongly opposes tariffs, and has been able to blunt the Administration’s further imposition of tariffs on European partners. Public opinion still strongly supports transatlantic defence and trade relations, even as partisan differences grow.
Topic:
Defense Policy, NATO, International Cooperation, Tariffs, and Transatlantic Relations
Political Geography:
United States, Europe, North Atlantic, and North America

9. The Economic Losses from Ending the WTO Moratorium on Electronic Transmissions

Author:
Hosuk Lee-Makiyama and Badri Narayanan Gopalakrishnan
Publication Date:
08-2019
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
This paper is co-authored with Badri Narayanan, PhD, Associate Professor at University of Washington, Consultant at McKinsey Global Institute, UN ESCWA, FAO, Commonwealth Secretariat and GTAP Research Centre. Since 1998, the WTO Members have applied a moratorium against tariffs on international electronic transmissions (commonly referred to as the WTO ‘E-Commerce’ Moratorium). However, some WTO Members have recently debated whether the moratorium remains in their economic interest, given the potential revenues that might be generated by imposing tariffs on electronic transmissions. The study examines the impact on India, Indonesia, South Africa and China (and the general case for developing countries) and concludes that imposing such tariffs would be fiscally counter-productive. Putting aside any legal questions, a country that opted out of the moratorium may apply tariffs affecting a wide range of cross-border business activities. Our research shows that if countries ceased to uphold the moratorium and levied import duties on digital goods and services, they would suffer negative economic consequences in the form of higher prices and reduced consumption, which would in turn slow GDP growth and shrink tax revenues. Yet our research indicates that the payoff in tariff revenues would ultimately be minimal relative to the scale of economic damage that would result from import duties on electronic transmissions.
Topic:
Globalization, International Political Economy, International Trade and Finance, Digital Economy, Tariffs, Trade, and WTO
Political Geography:
Europe and Global Focus

10. WTO'ing a Resolution to the China Subsidy Problem

Author:
Chad P. Bown and Jennifer A. Hillman
Publication Date:
10-2019
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
The United States, the European Union, and Japan have begun a trilateral process to confront the Chinese economic model, including its use of industrial subsidies and deployment of state-owned enterprises. This paper seeks to identify the main areas of tension and to assess the legal-economic challenges to constructing new rules to address the underlying conflict. It first provides a brief history of subsidy disciplines in the General Agreement on Tariffs and Trade and the World Trade Organization (WTO) predating any concerns introduced by China. It then describes contemporary economic problems with China’s approach to subsidies, their impact, and the apparent ineffectiveness of the WTO’s Agreement on Subsidies and Countervailing Measures to address them. Finally, it calls for increased efforts to measure and pinpoint the source of the problems—in a manner analogous to how the Organization for Economic Cooperation and Development took on agricultural subsidies in the 1980s—before providing a legal-economic assessment of proposals for reforms to notifications, evidence, remedies, enforcement, and the definition of a subsidy.
Topic:
Economics, World Trade Organization, Tariffs, and Trade
Political Geography:
Japan, Europe, Asia, North America, United States of America, and European Union