Feodora Teti

Discriminatory trade policy creates incentives to circumvent it by transshipping goods through third countries. We study how much transshipment weakens the export bans the European Union imposed on Russia in 2022. Linking Russian transaction-level customs records with new data on the bans, we observe transshipment directly: banned EU goods worth about 20% of pre-war imports keep arriving. The bans act like a 69% trade cost increase, and stricter enforcement shifted sales to third-country intermediaries rather than stopping them. In a general-equilibrium model with endogenous transshipment, the same bans would raise Russia's real-income loss by 32% without transshipment. Closing every route currently in use would recover only 41% of Russia's gain from transshipment, because trade moves to routes not yet used.

This paper reveals significant errors in a key variable in international trade: tariff rates. The issues arise from incomplete reporting, leading to measurement error from false interpolation by the data provider, the World Integrated Trade Solution (WITS), and selection bias from dropping tariffs when no trade is recorded. I develop a novel interpolation algorithm to correct these issues and construct a global tariff dataset. Reestimating recent studies relying on WITS data highlights the importance of correcting these errors. Studies using cross-country tariff variation, such as estimates of the trade elasticity, are particularly sensitive to the mishandling of the tariff data.

We use detailed tariff data and a dynamic trade and reallocation model with downward nominal wage rigidities to quantitatively assess the economic consequences of the recent increase in U.S. import tariffs and the responses of its trading partners. Higher tariffs trigger an expansion in U.S. manufacturing and agricultural employment, but this comes at the expense of a decline in service employment, with overall employment declining as lower real wages reduce labor-force participation. For the United States as a whole, real income falls around 0.4% by 2028, the last year we assume the high tariffs are in effect. Importantly, our analysis disaggregates the U.S. into its 50 states, while incorporating cross-state redistribution of the tariff-generated fiscal revenue, allowing us to analyze which states gain or lose more from the shock. Turning to cross-country results, some close U.S. trading partners—like Canada, Mexico, and Ireland—suffer the largest real income losses.

We study the role of geoeconomics in shaping globalisation and trade policy. We first review the evolution of world trade since the end of World War II, highlighting the drivers of globalisation and its economic consequences. We then synthesise recent research on geoeconomics, which analyses how countries use trade policy as a tool to pursue geopolitical objectives. Against this background, we argue that the gradual shift in geoeconomic power from the United States toward China since the 2000s has been driving a fragmentation in world trade along geopolitical lines. We provide conceptual policy recommendations for the European Union to navigate an environment characterised by intensifying geopolitical competition.

Modern regional trade agreements (RTAs) focus on promoting bilateral exchange mostly by lowering non‑tariff barriers to trade (NTBs). But do existing RTAs actually deliver what they promise? We argue that existing results in the literature are upward-biased because of measurement error in a crucial control variable: tariff rates. Using a novel data set of high-quality tariff information, we show that, on average, NTB reductions in deep RTAs boost services trade but not goods trade. Estimating separate NTB effects for each RTA reveals strong heterogeneity: only 23% of all RTAs seem to lower NTBs; for most, we cannot find any significant effect; while 9% appear to even reduce trade, possibly because more balanced regulation evens out comparative advantages. Trade agreements that foster trade the most are the ones including non-discriminatory trade policy changes.

When a country grants preferential tariffs to another, either reciprocally in a free trade agreement (FTA) or unilaterally, rules of origin (RoOs) are defined to determine whether a product is eligible for preferential treatment. RoOs exist to avoid that exports from third countries enter through the member with the lowest tariff (trade deflection). However, RoOs distort exporters' sourcing decisions and burden them with red tape. Using a global data set, we show that, for 86% of all bilateral product-level comparisons within FTAs, trade deflection is not profitable because external tariffs are rather similar and transportation costs are non-negligible; in the case of unilateral trade preferences extended by rich countries to poor ones that ratio is a striking 98%. The pervasive and unconditional use of RoOs is, therefore, hard to rationalize.

This paper evaluates the effects of sanctions on Russia between 2014 and 2019 and the resulting countersanctions. We estimate their impact on trade in a gravity framework, allowing for treatment heterogeneity among pairs and sectors, and use the estimated elasticities in a general equilibrium analysis. We find that the sanctions decreased trade with Russia in key sectors, translating to a loss in real income in Russia by 0.3%. Full decoupling of the EU and its allies from Russia would increase this effect to over 4%. Our results emphasize the role of deep sanctions as a foreign policy instrument and international cooperation.

The Russian invasion of Ukraine in 2022 led to unprecedented sanctions aimed at denying Russia access to critical technologies essential for sustaining its war efforts. This paper examines whether trade sanctions targeting military goods were undermined by evasion, specifically through transshipment through Russia-friendly countries. We find that Russia-friendly countries are 20 pp more likely to export military goods to Russia relative to neutral countries after the war began, while exports of military goods from Western allies to these countries also increased. Our results show that weak enforcement significantly undermines the effectiveness of sanctions.

This paper estimates trade elasticities using tariff reductions generated by free trade agreements. We construct a novel instrument that interacts the timing of an agreement with pre-agreement MFN tariffs: after an agreement enters into force, products with higher initial MFN tariffs are expected to experience larger preferential tariff cuts. This generates policy-driven variation in applied tariffs across products within country pairs over time. We focus on Article XXIV agreements, which correspond to reciprocal free trade agreements and customs unions. In this sample, tariffs fall gradually after entry into force, with larger reductions at longer horizons. Trade flows respond with a lag, and the implied IV estimates point to trade elasticities of about one in absolute value after the first few years, rising to roughly 1.3–1.4 by later horizons. The results show that FTA-induced tariff variation provides a useful source of identification for trade elasticities and that accounting for gradual implementation is important for measuring the dynamic response of trade to tariff reductions.

With tariffs at historically low levels, current trade policy is very much centered around reducing non‑tariff barriers (NTBs), yet quantifying their effects remains challenging. This paper uses Brexit as a policy shock to estimate the effect of NTBs on trade. We compile new product-level data on the universe of regulatory measures that a UK-firm must fulfill at the border when exporting a product to the EU in response to Brexit. The structure of the event and the data allows us to account for endogeneity of trade policy, demand- and supply-shocks and isolate one channel through which NTBs affect trade – the documentary compliance costs. Our findings indicate that one additional requirement at the EU border decreases trade on both margins. This negative effect is magnified in small and new EU member states and heterogeneous across sectors. We categorize NTBs by type and show that the costs of Brexit are substantially influenced by the characteristics of NTBs and the extent of regulatory leeway.

Origin-specific tariffs make it profitable to reroute goods through third countries, yet quantitative trade models typically assume that trade barriers are fully enforced. We quantify the role of such transshipment for the 2025–26 U.S. tariffs, which are large, highly discriminatory across origins, and were imposed without new rules of origin. We embed endogenous rerouting in a product-level Eaton-Kortum model, in which rerouting is profitable only when the tariff saved by declaring the transshipment country as the origin exceeds the additional route cost and any duty levied there, and in which tariff revenue is tracked along the chosen route. Rerouting substantially attenuates the import response: aggregate U.S. imports from foreign origins fall by 32% under full enforcement but by only 13% under least-cost transshipment. Tariff revenue is USD 35 billion lower, and the U.S. welfare effect flips from a loss of 0.15% to a gain of 0.04%. Separating transshipment from trade diversion, our framework bounds how much the full-enforcement assumption overstates the effects of discriminatory tariffs.