Rising Import Tariffs, Falling Export Growth: When Modern Supply Chains Meet Old-Style Protectionism
January 2020
Working Paper Number:
CES-20-01
Abstract
We examine the impacts of the 2018-2019 U.S. import tariff increases on U.S. export growth through the lens of supply chain linkages. Using 2016 confidential firm-trade linked data, we document the implied incidence and scope of new import tariffs. Firms that eventually faced tariff increases on their imports accounted for 84% of all exports and represented 65% of manufacturing employment. For all affected firms, the implied cost is $900 per worker in new duties. To estimate the effect on U.S. export growth, we construct product-level measures of import tariff exposure of U.S. exports from the underlying firm micro data. More exposed products experienced 2 percentage point lower growth relative to products with no exposure. The decline in exports is equivalent to an ad valorem tariff on U.S. exports of almost 2% for the typical product and almost 4% for products with higher than average exposure.
Document Tags and Keywords
Keywords
Keywords are automatically generated using KeyBERT, a powerful and innovative
keyword extraction tool that utilizes BERT embeddings to ensure high-quality and contextually relevant
keywords.
By analyzing the content of working papers, KeyBERT identifies terms and phrases that capture the essence of the
text, highlighting the most significant topics and trends. This approach not only enhances searchability but
provides connections that go beyond potentially domain-specific author-defined keywords.
:
manufacturing,
import,
export,
tariff,
shipment,
export growth,
exporting,
exporter,
factory,
importing,
spillover,
wholesale,
supplier,
exported,
imported,
trading,
importer,
custom
Tags
Tags are automatically generated using a pretrained language model from spaCy, which excels at
several tasks, including entity tagging.
The model is able to label words and phrases by part-of-speech,
including "organizations." By filtering for frequent words and phrases labeled as "organizations", papers are
identified to contain references to specific institutions, datasets, and other organizations.
:
International Trade Commission,
Federal Reserve Bank,
Longitudinal Business Database,
Federal Reserve System,
Retirement History Survey,
Federal Register,
Board of Governors,
North American Industry Classification System,
Harmonized System,
European Union,
Census Bureau Disclosure Review Board,
Longitudinal Firm Trade Transactions Database,
Disclosure Review Board
Similar Working Papers
Similarity between working papers are determined by an unsupervised neural
network model
know as Doc2Vec.
Doc2Vec is a model that represents entire documents as fixed-length vectors, allowing for the
capture of semantic meaning in a way that relates to the context of words within the document. The model learns to
associate a unique vector with each document while simultaneously learning word vectors, enabling tasks such as
document classification, clustering, and similarity detection by preserving the order and structure of words. The
document vectors are compared using cosine similarity/distance to determine the most similar working papers.
Papers identified with 🔥 are in the top 20% of similarity.
The 10 most similar working papers to the working paper 'Rising Import Tariffs, Falling Export Growth: When Modern Supply Chains Meet Old-Style Protectionism' are listed below in order of similarity.
-
Working PaperSupply Chain Adjustments to Tariff Shocks: Evidence from Firm Trade Linkages in the 2018-2019 U.S. Trade War🔥
August 2024
Working Paper Number:
CES-24-43
We use the 2018-2019 U.S. trade war to examine how supply chains adjustments to a tariff cost shock affect imports and exports. Using confidential firm-trade linked data, we show that the decline in imports of tariffed goods was driven by discontinuations of U.S. buyer'foreign supplier relationships, reduced formation of new relationships, and exits by U.S. firms from import markets altogether. However, tariffed products where imports were concentrated in fewer suppliers had a smaller decline in import growth. We then construct measures of export exposure to import tariffs by linking tariffs paid by importing firms to their exported products. We find that the most exposed products had lower exports in 2018-2019, with most of the impact occurring in 2019.View Full Paper PDF
-
Working PaperRecall and Response: Relationship Adjustments to Adverse Information Shocks🔥
March 2020
Working Paper Number:
CES-20-13R
How resilient are U.S. buyer-foreign supplier relationships to new information about product defects? We construct a novel dataset of U.S. consumer-product recalls sourced from foreign suppliers between 1995 and 2013. Using an event-study approach, we find that compared to control relationships, buyers that experience recalls temporarily reduce their probability of trading with the suppliers of the recalled products by 17%. The reduction is much larger for new than established buyer'supplier relationships. Buyers that experience a recall are more likely to add other suppliers to their portfolios, diversifying supplier-specific risk in the aftermath of a recall; this effect, too, is larger for buyers impacted by recalls in new relationships. There is a long lag ' up to two years ' before diversification, consistent with a high cost of establishing new relationships.View Full Paper PDF
-
Working PaperInput Linkages and the Transmission of Shocks: Firm-Level Evidence from the 2011 Tohoku Earthquake
September 2015
Working Paper Number:
CES-15-28
Using novel firm-level microdata and leveraging a natural experiment, this paper provides causal evidence for the role of trade and multinational firms in the cross-country transmission of shocks. Foreign multinational affiliates in the U.S. exhibit substantial intermediate input linkages with their source country. The scope for these linkages to generate cross-country spillovers in the domestic market depends on the elasticity of substitution with respect to other inputs. Using the 2011 Tohoku earthquake as an exogenous shock, we estimate this elasticity for those firms most reliant on Japanese imported inputs: the U.S. affiliates of Japanese multinationals. These firms suffered large drops in U.S. output in the months following the shock, roughly one-for-one with the drop in imports and consistent with a Leontief relationship between imported and domestic inputs. Structural estimates of the production function for these firms yield disaggregated production elasticities that are similarly low. Our results suggest that global supply chains are sufficiently rigid to play an important role in the cross-country transmission of shocks.View Full Paper PDF
-
Working PaperPayroll Tax Incidence: Evidence from Unemployment Insurance
June 2024
Working Paper Number:
CES-24-35
Economic models assume that payroll tax burdens fall fully on workers, but where does tax incidence fall when taxes are firm-specific and time-varying? Unemployment insurance in the United States has the key feature of varying both across employers and over time, creating the potential for labor demand responses if tax costs cannot be fully passed through to worker wages. Using state policy changes and administrative data of matched employer-employee job spells, I study how employment and earnings respond to unexpected payroll tax increases for highly exposed employers. I find significant drops in employment growth driven by lower hiring, and minimal evidence of passthrough to earnings. The negative employment effects are strongest for young workers and single-establishment firms.View Full Paper PDF
-
Working PaperAggregation Bias in the Measurement of U.S. Global Value Chains
September 2024
Working Paper Number:
CES-24-49
This paper measures global value chain (GVC) activity, defined as imported content of exports, of U.S. manufacturing plants between 2002 and 2012. We assesses the extent of aggregation bias that arises from relying on industry-level exports, imports, and output to establish three results. First, GVC activity based on industry-level data underestimate the actual degree of GVC engagement by ignoring potential correlations between import and export activities across plants within industries. Second, the bias grew over the sample period. Finally, unlike with industry-level measures, we find little slowdown in GVC integration by U.S. manufacturers.View Full Paper PDF
-
Working Paper"It's Not You, It's Me": Breakup In U.S.-China Trade Relationships
February 2014
Working Paper Number:
CES-14-08
This paper uses confidential U.S. Customs data on U.S. importers and their Chinese exporters toinvestigate the frictions from changing exporting partners. High costs from switching partners can affect the efficiency of buyer-supplier matches by impeding the movement of importers from high to lower cost exporters. I test the significance of this channel using U.S. import data, which identifies firms on both sides (U.S. and foreign) of an international trade relationship, the location of the foreign supplier, and values and quantities for the universe of U.S. import transactions. Using transactions with China from 2003-2008, I find evidence suggesting that barriers to switching exporters are considerable: 45% of arm's-length importers maintain their partner from one year to the next, and one-third of all switching importers remain in the same city as their original partner. In addition, importers paying the highest prices are the most likely to change their exporting partner. Guided by these empirical regularities, I propose and structurally estimate a dynamic discrete choice model of exporter choice, embedded in a heterogeneous firm model of international trade. In the model, importing firms choose a future partner using information for each choice, but are subject to partner and location-specific costs if they decide to switch their current partner. Structural estimates of switching costs are large, and heterogeneous across industries. For the random sample of 50 industries I use, halving switching costs shrinks the fraction of importers remaining with their partner from 57% to 18%, and this improvement in match efficiency leads to a 12.5% decrease in the U.S.-China Import Price Index.View Full Paper PDF
-
Working PaperImporters, Exporters, and Multinationals: A Portrait of Firms in the U.S. that Trade Goods
October 2005
Working Paper Number:
CES-05-20
This paper provides an integrated view of globally engaged U.S. firms by exploring a newly developed dataset that links U.S. international trade transactions to longitudinal data on U.S. enterprises. These data permit examination of a number of new dimensions of firm activity, including how many products firms trade, how many countries firms trade with, the characteristics of those countries, the concentration of trade across firms, whether firms transact at arms length or with related parties, and whether firms import as well as export. Firms that trade goods play an important role in the U.S., employing more than a third of the U.S. workforce. We find that the most globally engaged U.S. firms, i.e. those that both export to and import from related parties, dominate U.S. trade flows and employment at trading firms. We also find that firms that begin trading between 1993 and 2000 experience especially rapid employment growth and are a major force in overall job creation.View Full Paper PDF
-
Working PaperEclipse of Rent-Sharing: The Effects of Managers' Business Education on Wages and the Labor Share in the US and Denmark
December 2022
Working Paper Number:
CES-22-58
This paper provides evidence from the US and Denmark that managers with a business degree ('business managers") reduce their employees' wages. Within five years of the appointment of a business manager, wages decline by 6% and the labor share by 5 percentage points in the US, and by 3% and 3 percentage points in Denmark. Firms appointing business managers are not on differential trends and do not enjoy higher output, investment, or employment growth thereafter. Using manager retirements and deaths and an IV strategy based on the diffusion of the practice of appointing business managers within industry, region and size quartile cells, we provide additional evidence that these are causal effects. We establish that the proximate cause of these (relative) wage effects are changes in rent-sharing practices following the appointment of business managers. Exploiting exogenous export demand shocks, we show that non-business managers share profits with their workers, whereas business managers do not. But consistent with our first set of results, these business managers show no greater ability to increase sales or profits in response to exporting opportunities. Finally, we use the influence of role models on college major choice to instrument for the decision to enroll in a business degree in Denmark and show that our estimates correspond to causal effects of practices and values acquired in business education--rather than the differential selection into business education of individuals unlikely to share rents with workers.View Full Paper PDF
-
Working PaperA Long View of Employment Growth and Firm Dynamics in the United States: Importers vs. Exporters vs. Non-Traders
December 2021
Working Paper Number:
CES-21-38
The first experimental product from the U.S. Census Bureau's Business Dynamics Statistics (BDS) program -- BDS-Goods Traders -- provides annual, public-use measures of business dynamics by four mutually exclusive goods-trading classifications: exporter only, importer only, exporter and importer, and non-trader. The BDS-Goods Traders offers a comprehensive view of employment growth at firms associated with goods trading activities in the United States from 1992-2019. We highlight three patterns. First, employment is skewed towards goods traders in several ways. Only 6% of all U.S. firms are goods traders but they account for half of total employment. Moreover, 80% of large firms and 70% of older firms are goods traders. Second, exporter-importer firms represent 70% of manufacturing employment and over half of employment in services-producing industries (management, retail, transportation, utilities, and wholesale). Third, goods-traders exhibit higher net job creation rates than non-traders controlling for firm size, age, and sector. Goods traders contribution to total job creation grows over time, rising to more than half after 2008.View Full Paper PDF
-
Working PaperExport Prices of U.S. Firms
December 2011
Working Paper Number:
CES-11-42
Using confidential firm-level data from the United States in 2002, we show that exporting firms charge prices for narrowly defined goods that differ substantially with the characteristics of firms and export markets. We control for selection into export markets using a three-stage estimator. We have three main results. First, we find that that highly productive and skill intensive firms charge higher prices, while capital-intensive firms charge lower prices. Second, the very large correlation between distance and export prices found by Baldwin and Harrigan (2011) is largely due to a composition effect. Third, U.S. firms charge slightly higher prices to larger and richer markets, and substantially higher prices to markets other than Canada and Mexico.View Full Paper PDF
