Working Paper: NBER ID: w30318
Authors: Tuo Chen; Changtai Hsieh; Zheng Michael Song
Abstract: We use Chinese customs data to show that unofficial non-tariff barriers were responsible for 50\\% of the overall reduction in Chinese imports from the U.S. during the height of the U.S.-China trade war in 2018 and 2019. We infer non-tariff barriers from the change in imports of U.S. products relative to imports from other countries of the same HS-6 product, after controlling for the change in the relative price of U.S. imports to the same product sold by other countries. These barriers were imposed on a small number of agricultural products, did not apply to state-owned importers, and were larger for products where the share of state importers in total imports of the U.S. product was large. Non-tariff barriers were responsible for more than 90\\% of the welfare cost to Chinese consumers of the U.S.-China trade war. The welfare loss to China of a given reduction in imports from the U.S. from non-tariff barriers is about six times larger than an equivalent import decline due to higher tariffs. Non-tariff barriers are more costly compared to tariffs because they applied to some importers and not others, which results in misallocation, and because non-tariff barriers do not generate revenues.
Keywords: Nontariff barriers; US-China trade war; Welfare cost; Trade policy
JEL Codes: E0; F0; F13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Nontariff barriers (NTBs) (F13) | reduction in Chinese imports from the US (F69) |
| Nontariff barriers (NTBs) (F13) | welfare loss for Chinese consumers (D69) |
| Nontariff barriers (NTBs) (F13) | allocation of imports in China (F14) |
| Nontariff barriers (NTBs) (F13) | welfare loss quantified as $40 billion (D69) |
| tariff changes (F13) | import growth (O42) |