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The Biggest Losers (and Winners) from U.S. Trade Liberalization


  • Kara M. Reynolds

    () (Department of Economics, American University)


Many development experts worry that continuing reductions of tariff levels in high-income countries will limit trade flows from developing countries that benefit from preferential trade programs because of “preference erosion.” Using a panel of U.S. import data between the years of 1997 and 2005, I find that reductions in preference margins will significantly diminish imports of some products, particularly from lowermiddle and low income countries; for example, a one percent reduction in the U.S. tariff on a product that is currently imported duty-free from developing countries will decrease imports of that product from lowermiddle countries by an average of 2.6 percent. However, many products produced by developing countries fail to qualify for preferential tariffs, thus a gradual reduction in all U.S. tariff rates is expected to have only a modest impact on trade flows from developing countries.

Suggested Citation

  • Kara M. Reynolds, 2007. "The Biggest Losers (and Winners) from U.S. Trade Liberalization," Working Papers 2007-06, American University, Department of Economics.
  • Handle: RePEc:amu:wpaper:0607

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    References listed on IDEAS

    1. Vincent P. Crawford & Miguel A. Costa-Gomes, 2006. "Cognition and Behavior in Two-Person Guessing Games: An Experimental Study," American Economic Review, American Economic Association, vol. 96(5), pages 1737-1768, December.
    2. Golan, Amos, 2007. "Information and entropy econometrics - volume overview and synthesis," Journal of Econometrics, Elsevier, vol. 138(2), pages 379-387, June.
    3. Colin F. Camerer & Teck-Hua Ho & Juin-Kuan Chong, 2004. "A Cognitive Hierarchy Model of Games," The Quarterly Journal of Economics, Oxford University Press, vol. 119(3), pages 861-898.
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    More about this item


    Generalized System of Preferences; Preference Erosion; Preferential Tariffs;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development


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