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Tariff Rate Uncertainty and the Structure of Supply Chains / Sebastian Heise, Justin R. Pierce, Georg Schaur, Peter K. Schott.
- Format:
- Book
- Author/Creator:
- Heise, Sebastian.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w32138.
- NBER working paper series no. w32138
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2024.
- Summary:
- We show that reducing the probability of a trade war promotes long-term importer-exporter relationships that ensure provision of high-quality inputs via incentive premia. Empirically, we introduce a method for distinguishing between these Japanese versus spot-market (i.e., American) relationships in customs data, show that their use varies intuitively across trading partners and products, and find that Japanese importing from China increases after a reduction in the possibility of a trade war. Extending the standard general equilibrium trade model to encompass potential trade wars and relational contracts, we estimate that eliminating Japanese procurement reduces welfare about a third as much as moving to autarky.
- Notes:
- Print version record
- February 2024.
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