arXiv releases research paper on MFN tariffs and trade diversion
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Maria Cipollina and Luca De Benedictis published an academic paper in quantitative finance studying the impact of most-favored-nation (MFN) tariff increases on trade patterns. Based on domestic and international trade data, the study employs a structural gravity model incorporating CES-consistent bilateral tariff margins, using recent U.S. trade policy changes as an empirical application. It finds that MFN tariff increases reduce imports while diverting trade toward preferential exporters, with significant heterogeneity across sectors and regions, and losses concentrated in intermediate and capital goods.
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- arXiv q-finLeveraging U.S. Business Adjustments: Most-Favored-Nation Tariffs and Trade Diversion
An academic study in quantitative finance examines the impact of most-favored-nation (MFN) tariff increases on trade patterns. Based on domestic and foreign trade data, the study employs a structural gravity model with CES-consistent bilateral tariff margins, using recent U.S. trade policy changes as an empirical application. The study finds that MFN tariff increases reduce imports while diverting trade toward preferential exporters, with significant heterogeneity across industries and regions, and losses most concentrated in intermediate and capital goods.
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