Who gets hurt with U.S. tariffs on cars?

You will find more infographics at Statista

The Economics and Politics of Revoking NAFTA

From a new NBER working paper by Raphael Auer, Barthélémy Bonadio, and Andrei A. Levchenko 

Abstract:

We provide a quantitative assessment of both the aggregate and the distributional effects of revoking NAFTA using a multi-country, multi-sector, multi-factor model of world production and trade with global input-output linkages. Revoking NAFTA would reduce US welfare by about 0.2%, and Canadian and Mexican welfare by about 2%. The distributional impacts of revoking NAFTA across workers in different sectors are an order of magnitude larger in all three countries, ranging from -2.7 to 2.26% in the United States. We combine the quantitative results with information on the geographic distribution of sectoral employment, and compute average real wage changes in each US congressional district, Mexican state, and Canadian province. We then examine the political correlates of the economic effects. Congressional district-level real wage changes are negatively correlated with the Trump vote share in 2016: districts that voted more for Trump would on average experience greater real wage reductions if NAFTA is revoked.

Gated version here. 

Tax Foundation's International Tax Competitiveness Index

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From the Tax Foundation: 

The structure of a country’s tax code is an important determinant of its economic performance. A well-structured tax code is easy for taxpayers to comply with and can promote economic development while raising sufficient revenue for a government’s priorities. In contrast, poorly structured tax systems can be costly, distort economic decision-making, and harm domestic economies.

Read more here. 

The U.S. is back on top!

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Alan Blinder's very useful and very informative column on trade

Worth a read from Alan Blinder: "A Brief Introduction to Trade Economics: Why deficits are normal, especially for a country like the U.S., and what is comparative advantage."

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New NBER Working Paper: Redistributing the Gains From Trade Through Progressive Taxation

A new working paper from Spencer G. Lyon and Michael E. Waugh  

Abstract:

Should a nation's tax system become more progressive as it opens to trade? Does opening to trade change the benefits of a progressive tax system? We answer these question within a standard incomplete markets model with frictional labor markets and Ricardian trade.  Consistent with empirical evidence, adverse shocks to comparative advantage lead to labor income losses for import-competition-exposed workers; with incomplete markets, these workers are imperfectly insured and experience welfare losses.  A progressive tax system is valuable, as it substitutes for imperfect insurance and redistributes the gains from trade.  However, it also reduces the incentives for labor to reallocate away from comparatively disadvantaged locations.  We find that optimal progressivity should increase with openness to trade with a ten percentage point increase in openness necessitating a five percentage point increase in marginal tax rates for those at the top of the income distribution.

Gated copy available here.

How many jobs are dependent on trade with Canada?

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How Large are the U.S. Economy Gains from Trade?

From a working paper by Arnaud Costinot and Andrés Rodríguez-Clare: 

Abstract: 

About 8 cents out of every dollar spent in the United States is spent on imports. What if, because of a wall or some other extreme policy intervention, imports were to remain on the other side of the US border? How much would US consumers be willing to pay to prevent this hypothetical policy change from taking place? The answer to this question represents the welfare cost from autarky or, equivalently, the welfare gains from trade. In this article, we discuss how to evaluate these gains using the demand for foreign factor services. The estimates of gains from trade for the US economy that we review range from 2 to 8 percent of GDP. 

A less technical overview is presented in the NBER Digest from April 2018

Which states get hurt in an all out trade war?

Courtesy of: Visual Capitalist

Which U.S. sectors will feel the impact of Chinese tariffs

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Trade does not increase income inequality

A recent IMF paper by Diego A. Cerdeiro and Andras Komaromi  "Trade and Income in the Long Run: Are There Really Gains, and Are They Widely Shared?" tackles big questions about income and income inequality related to trade. 

Abstract

In the cross-section of countries, there is a strong positive correlation between trade and income, and a negative relationship between trade and inequality. Does this reflect a causal relationship? We adopt the Frankel and Romer (1999) identification strategy and exploit countries' exogenous geographic characteristics to estimate the causal effect of trade on income and inequality. Our cross-country estimates for trade's impact on real income are consistently positive and significant over time. At the same time, we do not find any statistical evidence that more trade increases aggregate measures of income inequality. Heeding previous concerns in the literature (e.g. Rodriguez and Rodrik, 2001; Rodrik, Subramanian and Trebbi, 2004), we carefully analyze the validity of our geography-based instrument, and confirm that the IV estimates for the impact of trade are not driven by other direct or indirect effects of geography through non-trade channels.