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Retaliation through Temporary Trade Barriers

Author

Listed:
  • Davide Furceri
  • Mr. Jonathan David Ostry
  • Mr. Chris Papageorgiou
  • Pauline Wibaux

Abstract

Are Temporary Trade Barriers (TTBs) introduced for strategic reasons? To answer this question, we construct a novel sectoral measure of retaliation using daily bilateral data on TTB responses in 1220 subsectors across a panel of 25 advanced and emerging market economies over 1989-2019. Stylized facts and econometric analysis suggest that within-year responses are more important in terms of intensity and frequency than commonly understood from the existing literature, which has tended to ignore them. We find that retaliation often consists of responses across many sectors and that same-sector retaliation is far from being the norm. In addition, we find that larger countries tend to retaliate more, and that retaliation is larger during periods of higher unemployment and when the trading partner targeted a domestic comparative advantage sector.

Suggested Citation

  • Davide Furceri & Mr. Jonathan David Ostry & Mr. Chris Papageorgiou & Pauline Wibaux, 2023. "Retaliation through Temporary Trade Barriers," IMF Working Papers 2023/099, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2023/099
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    Cited by:

    1. Estefania-Flores, Julia & Furceri, Davide & Hannan, Swarnali A. & Ostry, Jonathan D. & Rose, Andrew K., 2023. "Are trade restrictions counter-cyclical? Evidence from a new aggregate measure," Journal of Policy Modeling, Elsevier, vol. 45(4), pages 745-767.
    2. Louise Curran & Carlos Carrasco-Farré, 2024. "Leveraging natural language processing techniques to explore the potential impact of the EU’s Carbon Border Adjustment Mechanism (CBAM)," Journal of International Business Policy, Palgrave Macmillan, vol. 7(2), pages 181-202, June.
    3. Bandyopadhyay, Subhayu & Basu, Arnab K. & Chau, Nancy H. & Mitra, Devashish, 2025. "On terms of trade, offshoring ties, and the enforcement of trade agreements," Journal of Economic Behavior & Organization, Elsevier, vol. 238(C).

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    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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