Trade Policy and the China Syndrome

Abstract

The recent backlash against free trade is partially motivated by the decline in manufacturing employment due to rising import competition from China. Previous studies about the "China syndrome" neglect the role of trade policy. This is surprising, given that politicians in highincome countries have extensively used antidumping (AD) measures to protect their economies from rising Chinese imports. In this paper, I estimate the causal effect of trade protection on imports and employment, by constructing a new instrument for AD measures based on industries' importance in swing states and experience in filing AD petitions. I show that AD duties have reduced import competition, decreasing the annual growth rate of US imports from China by 0.40 percentage points on average. They have also helped contain the China syndrome, by increasing the annual growth rate of employment in protected industries by 0.07 percentage points. These results show that protectionist instruments allowed under GATT/WTO rules can be used to attenuate the effects of import competition on employment.

The Politics of Trade Adjustment Versus Trade Protection

“…12 Beyond their purported goals, there are also recent indications that the two measures have similar economic effects. Recent work by Trimarchi (2018) shows that antidumping duties observably cushioned the effects of the China Shock; manufacturing sectors protected by AD measures saw employment grow by a higher rate than non-protected sectors.…”

“…Most explicitly, the WTO’s Agreement on Safeguards states that “A Member shall apply safeguard measures only to the extent necessary to prevent or remedy serious injury and to facilitate adjustment .” 12 Beyond their purported goals, there are also recent indications that the two measures have similar economic effects. Recent work by Trimarchi (2018) shows that antidumping duties observably cushioned the effects of the China Shock; manufacturing sectors protected by AD measures saw employment grow by a higher rate than non-protected sectors.…”

Chinese Exports and Non-Tariff Measures: Testing for Heterogeneous Effects at the Product Level

“…countries (e.g., Henson and Humprey 2009, Henson et al 2011, Murina and Nicita 2017. Trimarchi (2018), focusing on AD measures, and Leonardi and Meschi (2016) extend these positive effects to the labor market. Among these, Murina and Nicita (2017) exploit the rich UNCTAD TRAINS database in a disaggregated fashion, using a cross-section perspective, focusing on the effect of SPS measures on agricultural imports in the EU market and how the level of development in the country of origin may affect the capacities for compliance (the higher the income, the lower the difficulty in meeting the required standards).…”

Self-Harming Trade Policy? Protectionism and Production Networks

“…Other studies focus on economic outcomes beyond trade. Part of this literature addresses the so-called "China Syndrome," identifying the effects of rising Chinese import competition on U.S. local labor markets and the effects of protectionist trade policies in this context (e.g., Trimarchi, 2018). Barattieri, Cacciatore, and Ghironi (2018) study the effects of both TTBs and tariff changes on macroeconomic outcomes.…”