Policy Article

Who Benefits from Trade Wars?

Intereconomics, 53: 22-26

Even though economists keep on emphasising the benefi ts of international trade, protectionism is on the rise in many industrialised countries. The authors argue that a potential explanation for this phenomenon can be found in the short-run distributional effects of import tariffs: while protectionism hurts the economy from an aggregate perspective (i.e. GDP goes down), unskilled workers in import-competing sectors benefi t in the short run and do not lose in the long run. They might therefore lend political support to protectionism.

Authors

Mariya Mileva