Davin Chor: Exclusions for Sale? Tariff Exemptions in the US-China Trade War

The Program for Trade, Development and Political Economy welcomes Davin Chor from Dartmouth College.

In 2018-2019, the U.S. imposed a broad swathe of Section 301 tariffs that affected around two-thirds of the U.S.’s imports from China. Less well-known is the fact that U.S.-based companies could seek exemptions from these tariffs under an administrative process managed by the Office of the U.S. Trade Representative. Using data on the set of applications for exemptions, we document the extent of these exclusions (they were non-trivial), and explore what explains successful exclusion requests (importantly, whether the firm engaged in lobbying on trade issues). We develop and calibrate a “protection for sale” model in which firms reveal information about their dependence on imports from China as grounds for seeking a tariff exemption. We use this to assess the welfare implications of a tariff policy design that incorporates the possibility of exclusions.

Chor is an associate professor in economics group at Tuck School of Business and a chair in Dartmouth’s academic cluster on globalization, which studies the far-reaching repercussions of globalization on world markets, governments, trade and society. Professor Chor’s current research focuses on international trade and political economy. He is a research associate of the National Bureau of Economic Research (NBER) and a fellow of the Asian Bureau of Finance and Economic Research (ABFER). He presently serves as an associate editor at the Journal of International Economics, Review of International Economics, Journal of Comparative Economics, and as a co-editor at Economic Inquiry.