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Rationality and trade wars

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"Trade Wars: Nobody Expects the Spanish Inquisition"   CEPR Discussion Paper No. DP14079 EDDY BEKKERS ,  World Trade Organization (WTO) Email:  eddy.bekkers@wto.org JOSEPH F. FRANCOIS ,  University of Bern - Department of Economics, Centre for Economic Policy Research (CEPR), Vienna Institute of International Economic Studies (WIIW), University of Adelaide - School of Economics Email:  joseph.francois@gmail.com DOUGLAS NELSON ,  Tulane University - Department of Economics Email:  dnelson@tulane.edu HUGO ROJAS-ROMAGOSA ,  CPB Netherlands Bureau for Economic Policy Analysis Email:  h.rojas-romagosa@cpb.nl This paper assesses the utility of economic theory of rational trade wars to predict such events or to prescribe courses of action to control their consequences. Trade wars are fundamentally political events whose causes are almost completely political and whose consequences are to a significant degree also political. Contemporary economic theory has developed during a u

5 seats lost

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Did Trump's Trade War Impact the 2018 Election?"   CEPR Discussion Paper No. DP14091 EMILY J. BLANCHARD ,  Dartmouth College - Tuck School of Business Email:  Emily.J.Blanchard@tuck.dartmouth.edu CHAD P. BOWN ,  Peterson Institute for International Economics Email:  cbown@piie.com DAVIN CHOR ,  Dartmouth College - Tuck School of Business, National University of Singapore (NUS) - Department of Economics Email:  davinchor@gmail.com We find that Republican candidates lost support in the 2018 US congressional election in counties more exposed to trade retaliation, but saw no commensurate electoral gains from US tariff protection. The electoral losses were driven by retaliatory tariffs on agricultural products, and were only partially mitigated by the US agricultural subsidies announced in summer 2018. Republicans also fared worse in counties that had seen recent gains in health insurance coverage, affirming the importance of health care as an election issue. A counterfactual