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The Role of Innovations in Global Trade: The Shipping Container
A simple trade innovation—the use of shipping containers—may have contributed to the rapid expansion of global trade over the past 50 years.
Discussion Paper
Did the West Coast Port Dispute Contribute to the First-Quarter GDP Slowdown?
The decline in U.S. GDP of 0.2 percent in the first quarter of 2015 was much larger than market analysts expected, with net exports subtracting a staggering 1.9 percentage points (seasonally adjusted annualized rate). A range of factors is being discussed in policy circles to try to understand what contributed to this decline. Factors such as the strong U.S. dollar and weak foreign demand are usually incorporated in forecasters' models. However, the effects of unusual events such as extremely cold weather and labor disputes are more difficult to quantify in standard models. In this post, we ...
Journal Article
Decoupling Where it Matters? US Imports from China in Critical Sectors
The US has decreased its dependence on imports from China, dropping 7.7 percentage points in the share of total imports since 2017. Critical goods in communications and information technology have been most affected.
Discussion Paper
Falling Oil Prices and Global Saving
The rise in oil prices from near $30 per barrel in 2000 to around $110 per barrel in mid-2014 was a dramatic reallocation of global income to oil producers. So what did oil producers do with this bounty? Trade data show that they spent about half of the increase in total export revenues on imports and the other half to buy foreign assets. The drop in oil prices will unwind this process. Oil-importing countries will gain from lower oil bills, but they will also see a decline in their exports to oil-producing countries and in purchases of their assets by investors in these countries. Indeed, ...
Discussion Paper
The Evolution of Mexico’s Merchandise Trade Balance
Mexico runs a trade surplus with the United States owing to oil exports and cross-border supply chains, with imported U.S. components assembled in Mexico and then exported back to the United States. At the same time, Mexico runs a large trade deficit with Asia, the result of a surge of imports from that region over the past two decades. From Mexico’s perspective, this growing deficit with Asia has worked to offset an increasing trade surplus with the United States. More recently, the country’s merchandise balance suffered a substantial deterioration with the collapse of petroleum prices ...
Discussion Paper
The Impact of Import Tariffs on U.S. Domestic Prices
The United States imposed new import tariffs on about $283 billion of U.S. imports in 2018, with rates ranging between 10 percent and 50 percent. In this post, we estimate the effect of these tariffs on the prices paid by U.S. producers and consumers. We find that the higher import tariffs had immediate impacts on U.S. domestic prices. Our results suggest that the aggregate consumer price index (CPI) is 0.3 percent higher than it would have been without the tariffs.
Discussion Paper
Why Does the U.S. Always Run a Trade Deficit?
The obvious answer to the question of why the United States runs a trade deficit is that its export sales have not kept up with its demand for imports. A less obvious answer is that the imbalance reflects a macroeconomic phenomenon. Using national accounting, one can show deficits are also due to a persistent shortfall in domestic saving that requires funds from abroad to finance domestic investment spending. Reducing the trade imbalance therefore requires both more exports relative to imports and a narrowing of the gap between saving and investment spending.
Newsletter
What Is the Balance of Payments?
Learn about the accounting system used in the U.S. to measure international trade transactions.
Discussion Paper
Foreign Borrowing in the Euro Area Periphery: The End Is Near
Current account deficits in euro area periphery countries have now largely disappeared. This represents a substantial adjustment. Only two years ago, deficits stood at nearly 10 percent of GDP in Greece and Portugal and 5 percent in Spain and Italy (see chart below). This sharp narrowing means that spending has been brought in line with income, largely righting an imbalance that had left these countries dependent on heavy foreign borrowing. However, adjustment has come at a sizable cost to growth, with lower domestic spending only partly offset by higher export sales. Downward pressure on ...
Discussion Paper
U.S. Exporters Could Face High Tariffs without NAFTA
An underappreciated benefit of the North American Free Trade Agreement (NAFTA) is the protection it offers U.S. exporters from extreme tariff uncertainty in Mexico. U.S. exporters have not only gained greater tariff preferences under NAFTA than Mexican exporters gained in the United States, they have also been exempt from potential tariff hikes facing other exporters. Mexico’s bound tariff rates—the maximum tariff rate a World Trade Organization (WTO) member can impose—are very high and far exceed U.S. bound rates. Without NAFTA, there is a risk that tariffs on U.S. exports to Mexico ...