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The United States' power‐based bargaining and the WTO: Has anything really been gained?

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  • Ian M. Sheldon

Abstract

In this article, adoption of “power‐based” bargaining by the United States in trade negotiations is evaluated. A simple game‐theoretic structure highlights use of “bargaining” tariffs by the United States elicited credible retaliation by China through a trigger strategy, bilateral tariffs returning to a Nash equilibrium. This has come at some cost to US consumers, taxpayers, and farmers, although the latter group has regained market share following implementation of the US–China Phase One Trade Agreement. Unfortunately, the Agreement fails to deal with a key reason for the trade war, the Chinese economic model, and China's use of implicit subsidies.

Suggested Citation

  • Ian M. Sheldon, 2022. "The United States' power‐based bargaining and the WTO: Has anything really been gained?," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(3), pages 1424-1439, September.
    • Handle: RePEc:wly:apecpp:v:44:y:2022:i:3:p:1424-1439
    DOI: 10.1002/aepp.13224
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    References listed on IDEAS

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    1. Jakubik, Adam & Keck, Alexander & Piermartini, Roberta, 2022. "Trade policy implications of a changing world: Tariffs and import market power," WTO Staff Working Papers ERSD-2022-14, World Trade Organization (WTO), Economic Research and Statistics Division.

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