Template-Type: ReDIF-Paper 1.0
Author-Name: Facundo Albornoz
Author-Name-First: Facundo
Author-Name-Last: Albornoz
Author-Name: Emanuel Ornelas
Author-Name-First: Emanuel
Author-Name-Last: Ornelas
Author-Name: Irene Brambilla
Author-Name-First: Irene
Author-Name-Last: Brambilla
Title: The Impact of Tariff Hikes on Firm Exports
Abstract: We study how firms react to unexpected increases in  import tariffs. We identify our results from a sudden removal of American  preferential tariffs applied on Argentine imports under the Generalized  System of Preferences, which reflected American retaliation to a dispute  over intellectual property between the two countries. Critical for  identification, the tariff hike affected a third of Argentine exports  enjoying preferential access in the American market, but did nothing to the  other two thirds. We find that the higher tariffs reduced export  participation of affected Argentine firms in the US market, whereas  resilient exporters dealt with the cost increase by reshuffling their export  baskets away from the products whose tariffs increased. In fact, affected  firms were more likely both to drop suspended products from their export  basket and to start exporting new (non-suspended) products to the US.  Interestingly, the extensive margin effects carry over third markets, where  policy did not change: after the policy shock, affected firms selling to the  US were less likely to export to other markets. This happened, however, only  for firms that also exited the American market. Those findings reveal the  nuanced consequences of tariff preferences on the behavior of exporting  firms, highlighting that their effect tend to spill over other products and  other markets.	
Length:  61 pages
Creation-Date:  2020-11
File-URL: https://aaep.org.ar/works/works2020/Brambilla.pdf
File-Format: Application/pdf
Number: 4316
Classification-JEL:  F13, F14, F55, F63, O19, O24
Keywords:  Tariffs, GSP, exporting firms, multiproduct firms, third-market effects
Handle: RePEc:aep:anales:4316