Import liberalization as export destruction? Evidence from the United States

Breinlich, Holger, Leromain, Elsa, Novy, Dennis and Sampson, Thomas ORCID: 0009-0006-2237-5497 (2025) Import liberalization as export destruction? Evidence from the United States. American Economic Journal: Macroeconomics. ISSN 1945-7707 (In Press)

Text (ExportDestruction_v9) - Accepted Version Pending embargo until 1 January 2100. Available under License Creative Commons Attribution. Download (1MB)

Abstract

In trade models with scale economies import liberalization reduces exports within industries by shrinking real market potential. We find that this export destruction mechanism reduced US export growth following the permanent normalization of trade relations with China (PNTR). There was also an offsetting boost to exports from lower input costs. We use our estimates to calibrate a quantitative model and show that scale economies are economically important for trade policy analysis. Although PNTR increased aggregate US exports relative to GDP, exports declined in the most exposed industries. US gains from PNTR are positive, but 30 percent smaller than under constant returns.

Item Type:	Article
Divisions:	Centre for Economic Performance Economics
Subjects:	H Social Sciences > HG Finance H Social Sciences > HB Economic Theory
JEL classification:	F - International Economics > F1 - Trade > F12 - Models of Trade with Imperfect Competition and Scale Economies F - International Economics > F1 - Trade > F13 - Commercial Policy; Protection; Promotion; Trade Negotiations; International Trade Organizations F - International Economics > F1 - Trade > F15 - Economic Integration
Date Deposited:	19 Mar 2025 14:33
Last Modified:	19 Mar 2025 14:33
URI:	http://eprints.lse.ac.uk/id/eprint/127595

Actions (login required)

View Item