“Tariff scares: Trade policy uncertainty and foreign market entry by Chinese firms”

“Tariff scares: Trade policy uncertainty and foreign market entry by Chinese firms”

Meredith Crowley, Ning Meng & Huasheng Song

In: Journal of International Economics, Vol. 114, Sep 2018, pp 96-115

Crowley et al. estimate how a rise in uncertainty about future tariff rates impacts firm decisions to enter into and exit from export markets. Using Chinese customs transactions between 2000 and 2009, they exploit time-variation in product-level trade policy and find that Chinese firms are less likely to enter new foreign markets and more likely to exit from established foreign markets when their products are subject to increased trade policy uncertainty.