From Tariff Changes to Trade Effects: A Practical Framework for Empirical Trade Policy Analysis

After decades of trade liberalization, the 2020s mark a profound shift in the globalization narrative, with tariffs once again becoming a central instrument of trade policy. This reversal also challenges how the effects of trade policy are evaluated. Much of the empirical literature has been developed to assess bilateral tariff reductions or elimination and the associated erosion of preferential advantages. Rising multilateral tariffs pose a different question: they alter not only the trade costs faced by directly affected exporters but also the relative market access of all competing suppliers, potentially reinforcing existing preferences. This paper develops a practical framework for translating tariff changes into trade effects in this new policy environment. We argue that liberalization and protectionism should not be treated as symmetric policy experiments: their effects operate through different changes in relative market access and therefore require careful consideration of how tariff shocks are measured and incorporated into empirical trade models and counterfactual evaluations.

Source: arXiv:2610.36171v1 - http://arxiv.org/abs/2610.36171v1 PDF: https://arxiv.org/pdf/2610.36171v1 Original Link: http://arxiv.org/abs/2610.36171v1