How much is a trade agreement worth even when it does not cut a single tariff?
Policy Uncertainty, Trade, and Welfare: Theory and Evidence for China and the United States
Kyle Handley, Nuno Limão (2017) · American Economic Review 107(9)
Article ↗ · Replication data ↗ (openICPSR)
The archive requires an account we do not hold, so the files were not opened. What follows rests on the published abstract and on this platform's own observations.
What the authors found
Handley and Limão argue that agreements have value by removing the threat of future protection, which changes whether firms invest in entering a market at all. Quantifying China's WTO accession in 2001, they find the reduction in the US threat of a trade war accounts for more than a third of China's export growth to the United States between 2000 and 2005, and that the fall in uncertainty was worth the equivalent of a permanent 13-percentage-point tariff cut to US consumers.
What our data adds
This is the note where our data has least to offer and the reason is worth stating. The IMF bilateral series in this database begins in 2010, five years after the window the paper studies ends. We can show what the relationship became — China exported 525 billion dollars of goods to the United States in 2024, and 21 per cent more than in 2017 despite the tariffs — but nothing about the accession period itself.
| Figure | Value | Indicator |
|---|---|---|
| China goods exports to the US, 2024 | 525bn USD | IMTS.XG_FOB_USD.A |
| Change since 2017, despite tariffs | +21% | IMTS.XG_FOB_USD.A |
Every figure here is computed from observations in this database and can be charted, downloaded or queried.
What this cannot show
The paper's mechanism is expectations, which leave no direct trace in trade volumes: the whole identification problem is that uncertainty and tariffs move together, and separating them takes the structural model the authors build. Even with the right years, a bilateral total could not have tested this. The note is included because a set of research notes that only covered questions our data can answer would misrepresent what the data is for.
The data behind it
Related notes
- When a country exports, how much of the value was actually made there — and how far does the usual export statistic mislead us?
- Who actually paid for the 2018 US tariffs, and what did they do to the pattern of trade?
- When two countries trade with each other and neither is the United States, whose currency is the price in?