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Does trade policy related uncertainty affect international trade? Evidence from the US-China commodity trade

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  • Serdar Ongan
  • Ismet Gocer

Abstract

This study examines the impacts of US and China trade policy uncertainties on the US’s commodity level bilateral trade balances (henceforth, BTBs) with China. To this end, newly created trade policy uncertainty (henceforth, TPU) indexes for both countries are used and the nonlinear ARDL model is applied. Empirical findings indicate that the impacts of US and China TPU indexes on US’s aggregated and disaggregated data BTBs are mostly different. The aggregated data model finds that increases in the US TPU index worsen US’s BTB. However, disaggregated models find ‘improvements’ in 4 and ‘no impacts’ in 3 commodities out of 10. Similarly, while the aggregated data model finds that increases in China’s TPU index improves US’s BTB, disaggregated models find ‘worsen’ in 4 and ‘no impacts’ in 5 commodities our of 10. Furthermore, increases in the US’s TPU index worsen US BTB the most in commodity beverages and tobacco.

Suggested Citation

  • Serdar Ongan & Ismet Gocer, 2020. "Does trade policy related uncertainty affect international trade? Evidence from the US-China commodity trade," China Economic Journal, Taylor & Francis Journals, vol. 13(3), pages 364-375, September.
    • Handle: RePEc:taf:rcejxx:v:13:y:2020:i:3:p:364-375
    DOI: 10.1080/17538963.2020.1786618
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    Cited by:

    1. Arunava Bandyopadhyay & Prabina Rajib, 2023. "The impact of Sino–US trade war on price discovery of soybean: A double‐edged sword?," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 43(7), pages 858-879, July.
    2. Serdar Ongan & Huseyin Karamelikli & Mine Aysen Doyran & Ismet Gocer & Charles A. Rarick & John Mellon, 2023. "The Bilateral USA-Mexico Trade Balances Under Decomposed Export Data," Journal of Industry, Competition and Trade, Springer, vol. 23(3), pages 171-186, December.

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