Relative Gains in the Shadow of a Trade War

Abstract

When do people care about relative gains in trade? Much of the international relations scholarship—and much of the political rhetoric on trade—would lead us to expect support for a trade policy that benefits ourselves more than it benefits others. Yet, a large interdisciplinary literature also points to the prevalence and importance of other-regarding preferences, rendering the conventional wisdom contestable. We investigate whether and how relative gains influence trade preferences through an original survey experiment in the midst of the China–US trade war. We find that in a win-win scenario, relative gains shape trade opinion: if both sides are gaining, people want to gain more than their foreign trade partner. However, these considerations are offset in a win-lose scenario where the other side is losing out. Relative-gains considerations causally affect opinion on trade, but not in a “beggar-thy-neighbor” or even a “beggar-thy-rival” situation. These findings contribute to our understanding of the role of relative gains in international relations and provide the first experimental evidence that relative-gains considerations can be offset by other-regarding preferences in international trade.

When to Not Respond in Kind? Individuals’ Expectations of the Future and Their Support for Reciprocity in Foreign Policy

“…Our results contribute to the flourishing literature that explores the role of behavioral norms and social preferences in driving individual foreign policy attitudes (e.g., Brutger & Rathbun, 2021 ; Kreps & Maxey, 2017 ; Powers et al, 2022 ; Yeung & Quek, 2022 ). Speaking to this body of research, our findings suggest that the effect of such norms, i.e., reciprocity, is not uniform across individuals, but rather vary based on their future assessments.…”

“…Research has established that humans have a psychological preference for fairness and prefer decisions that minimize inequity in payoffs (Fehr & Schmidt, 1999 ). Concerns over relative contributions and shares are particularly pronounced in the distributional settings of IO membership and trade agreements, where asymmetrical provisions can not only shift the power balance among participant countries, but, equally important, raise concerns over its equity and equality of the outcome (e.g., Gowa & Mansfield, 2004 ; Yeung & Quek, 2022 ). Hence, Brutger and Rathbun show, when evaluating trade relations, Americans’ attitudes are often driven by a sense of fairness, albeit an egoistic one, according to which they value equal distribution of concessions and benefits, but oppose agreements that leave their home country relatively behind ( 2021 ).…”

Towards a Long-Term Sino-US Relationship: Implications and Potential Solutions of the Future Chinese Media Strategy for Global Speech Power

“…Analysis of the discursive characteristics and behaviour of both sides reveals that American politicians tend to bring the two countries into a "decoupled" state of relationship and a reconstruction beginning with the former President Donald Trump, while the Chinese side tries to maintain the current state of relationship (Liff, 2019;Pervaiz et al, 2019;Weiss & Dafoe, 2019). Both sides attempt to make their own speech the dominant discourse and participate in a heated argument as usually demonstrated in diplomatic situations because the aims of relationship rebuilding and relationship maintenance are different from one another (McCourt, 2020;Myrick, 2021;Yeung & Quek, 2022). The results of the game theory payoff matrix also demonstrate that cooperation offers the best combination of benefits for both players, but in the event that the US side deliberately chooses conflict, the best course of action for China's interests is to embrace a comparable level of confrontation (Bell & Quek, 2018;Lee, 2012;Lu et al, 2020).…”

Asymmetrical fairness in trade preferences

“…Trade representatives, worker unions, corporations, and NGOs have advanced a variety of ideas about fairness in trade, and there is now a large literature on the concept of “fair trade.” Despite the prevalence of fairness concerns, however, asymmetrical fairness in particular has not been directly empirically examined, and the importance of fairness in general remains understudied in non-democratic polities. Moreover, previous studies that evaluate the importance of sociotropic attitudes on trade preferences generally concentrate on inequity aversion at the national (as opposed to international) level (Hearn 2020; Lockerbie 2006; Lü et al 2012; Mansfield and Mutz 2009; Mutz and Kim 2017; but see Brutger and Rathbun 2021; Herrmann et al 2001; Yeung and Quek 2022). 3 We therefore know little about the effect of asymmetrical fairness and how public preferences respond to international disparities in national capacities.…”

“…3.Herrmann et al (2001) showed that Americans are less supportive of protectionism if the gains from trade would be distributed to those in poverty in both the United States and the trade partner. Recent work by Yeung and Quek (2022) showed that while relative-gains considerations affect U.S. trade attitudes in a win-win scenario, the effects can be weakened by other-regarding considerations when the other side (either a rival or an unnamed state) is losing out in a win-lose scenario.…”