Lorenzo Trimarchi
(UNamur) will give a presentation on
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. Politicians in high-income countries have extensively used antidumping (AD) measures and other temporary trade barriers to protect their economies from rising Chinese imports. To estimate the causal effect of trade protection on industry outcomes, I construct a new instrument for AD measures based on the importance of an industry in swing states and the industry's experience in filing AD petitions. In this paper, I first show that trade policy contained the rise of Chinese imports in protected sectors, decreasing the annual growth rate of US imports from China in a range between 3% and 17% compared to the non-protected sectors estimated across four different measures of AD protection. Second, I show that these protectionist measures have contained the China syndrome. In manufacturing sectors protected by AD measures, the annual growth rate of employment was between 2% and 24% higher compared to non-protected sectors. I find that previous studies that neglect the moderating impact of AD have underestimated the negative effects of Chinese import competition on US manufacturing employment by 5% to 15%.