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The Looming Threat of Tariff Hikes: Entry into Exporting under Trade Agreement Renegotiation

Author

Listed:
  • Meredith A. Crowley
  • Oliver Exton
  • Lu Han

Abstract

We examine how the looming threat of tariff hikes under a trade agreement renegotiation impacts firm entry into a trading partner's market by exploiting uncertainty over the future UK-EU trade relationship brought about by the June 2016 Brexit referendum. Using the universe of UK export transactions at the firm and product level, we find that uncertainty over future market access to the EU deterred entry modestly in the months immediately after the Brexit vote, but the deterrent effect increased over time.

Suggested Citation

  • Meredith A. Crowley & Oliver Exton & Lu Han, 2020. "The Looming Threat of Tariff Hikes: Entry into Exporting under Trade Agreement Renegotiation," AEA Papers and Proceedings, American Economic Association, vol. 110, pages 547-551, May.
    • Handle: RePEc:aea:apandp:v:110:y:2020:p:547-51
    DOI: 10.1257/pandp.20201020
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    File URL: https://doi.org/10.3886/E117922V1
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    Cited by:

    1. Danziger, Eliav & Danziger, Leif, 2024. "A Minimum Wage May Increase Exports and Firm Size Even with a Competitive Labor Market," IZA Discussion Papers 16846, IZA Network @ LISER.
    2. Rebecca Freeman & Kalina Manova & Thomas Prayer & Thomas Sampson, 2022. "UK trade in the wake of Brexit," CEP Discussion Papers dp1847, Centre for Economic Performance, LSE.
    3. Suttner, Stefan, 2023. "Issue linkage and trade policy uncertainty: Evidence from trade preferences for developing countries," FAU Discussion Papers in Economics 07/2023, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.
    4. Mustapha Douch & Terence Huw Edwards, 2022. "The bilateral trade effects of announcement shocks: Brexit as a natural field experiment," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 37(2), pages 305-329, March.
    5. Jakubik, Adam & Ruta, Michele, 2023. "Trading with friends in uncertain times," Journal of Policy Modeling, Elsevier, vol. 45(4), pages 768-780.
    6. de Lucio, Juan & Mínguez, Raúl & Minondo, Asier & Requena, Francisco, 2024. "The negative impact of disintegration on trade: The case of Brexit," European Economic Review, Elsevier, vol. 163(C).
    7. Josh De Lyon & Swati Dhingra, 2020. "Covid-19 and Brexit: Real-time updates on business performance in the United Kingdom," CEP Covid-19 Analyses cepcovid-19-006, Centre for Economic Performance, LSE.
    8. Dainauskas, J. & Lastauskas, P., 2024. "Trade Shocks and the Transitional Dynamics of Markups," Cambridge Working Papers in Economics 2431, Faculty of Economics, University of Cambridge.
    9. Graziano, Alejandro G. & Handley, Kyle & Limão, Nuno, 2024. "An import(ant) price of Brexit uncertainty," Journal of International Economics, Elsevier, vol. 152(C).
    10. Schrader, Klaus & Jessen-Thiesen, Levke, 2021. "Deutsche Arbeitsplätze und Brexit: Die Bedeutung des Exports nach Großbritannien für die Beschäftigung in den deutschen Bundesländern," Kiel Policy Briefs 149, Kiel Institute for the World Economy.
    11. Hanwei HUANG & Tatsuro SENGA & Catherine THOMAS & Hongyong ZHANG, 2023. "Economic Disintegration and Multinational Production: Evidence from Brexit," Discussion papers 23037, Research Institute of Economy, Trade and Industry (RIETI).
    12. Eliav Danziger & Leif Danziger, 2024. "A Minimum Wage May Increase Exports and Firm Size Even with a Competitive Labor Market," CESifo Working Paper Series 10997, CESifo.

    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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