When tariffs disrupt global supply Chains
By: Grossman, G.M., Helpman, E. and Redding, S.J
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Material type: 
BookPublisher: The American Economic Review Description: 114(4), Apr, 2024: p.988-1029.Subject(s): Unanticipated Tariffs, Firm-to-firm Supply Relationships, Costly Searches, Supplier Negotiation, Match Productivity, Global Supply Chains, Free Trade Anticipation, Input Tariff, Renegotiation, Search for Replacements, Import Shares, US Tariffs, China Trade, Welfare Loss, GDP Impact, Input Sourcing, Search Costs, Economic Calibration, Trade Policy, Supply Chain Disruption, International Trade
In:
The American Economic ReviewSummary: We study unanticipated tariffs in a setting with firm-to-firm supply relationships. Firms conduct costly searches and negotiate with potential suppliers that pass a reservation level of match productivity. Global supply chains form in anticipation of free trade. Then, the home government surprises with an input tariff. This can lead to renegotiation with initial suppliers or search for replacements. Calibrating the model's parameters to match initial import shares and the estimated responses to the US tariffs imposed on China, we find an overall welfare loss of 0.12 percent of GDP, with substantial contributions from changes in input sourcing and search costs.- Reproduced
https://www.aeaweb.org/articles?id=10.1257/aer.20211519
| Item type | Current location | Call number | Vol info | Status | Date due | Barcode |
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Articles
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Indian Institute of Public Administration | 114(4), Apr, 2024: p.988-1029 | Available | AR132079 |
We study unanticipated tariffs in a setting with firm-to-firm supply relationships. Firms conduct costly searches and negotiate with potential suppliers that pass a reservation level of match productivity. Global supply chains form in anticipation of free trade. Then, the home government surprises with an input tariff. This can lead to renegotiation with initial suppliers or search for replacements. Calibrating the model's parameters to match initial import shares and the estimated responses to the US tariffs imposed on China, we find an overall welfare loss of 0.12 percent of GDP, with substantial contributions from changes in input sourcing and search costs.- Reproduced
https://www.aeaweb.org/articles?id=10.1257/aer.20211519
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