Cascading Trade Protection: Evidence from the US

15/11/2016 12:00 - 60 total view

The US President Barack Obama, moments before signing The Manufacturing Enhancement Act of 2010, stated in his speech that “...[manufacturers] often have to import certain materials from countries and pay tariffs on those materials. This legislation will reduce or eliminate some of those tariffs, which will significantly lower costs for American companies across the manufacturing landscape...” (Obama,2010). Input trade liberalization certainly has benefits. Amiti and Konings (2007), for example, show that a 10 percentage point fall in input tariffs results in a 12 percent gain in productivity for Indonesian firms that import these goods. Similarly, Goldberg et al. (2009) find that the Indian trade liberalization in 1991 enabled domestic firms to import new varieties and thus produce new products. Research in this area is mostly focused on liberalization and not on protection.
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