Trade policy is set by domestic political bargaining between globalists and protectionists, representing owners of factors specific to export and import-competing sectors respectively. Consistent with the post-Civil War Era of Restriction, protectionists implement high tariffs when status quo tariffs are low. When status quo tariffs are high, reciprocal free trade combined with domestic transfers to protectionists are implemented, explaining the 1930s Era of Reciprocity with Re- distribution. Consensus emerges for Retreat from free trade when imports are high and domestic transfers are low, suggesting that US protectionist turn in the late 2010s was in part due to low levels of social transfers.
Authors
- Acknowledgements and Disclosures
- The authors would like to thank Giampaolo Bonomi, Xiameng Hua and Yue Wang and for excellent research assistance, and workshop participants at UCSD and Princeton. For excellent comments, we thank Jeffrey Kucik, Malte Lammert, Joel Sobel, and seminar participants at Princeton University, UC San Diego, and the 2022 Political Economy of International Organizations (PEIO) conference at Oxford University. This research benefited from support from the Center for Commerce and Diplomacy at UC San Diego's School of Global Policy and Strategy. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
- DOI
- https://doi.org/10.3386/w31662
- Published in
- United States of America
