World Perspectives

Phase One Collateral Damage; Conditional Income Subsidies

Phase One Collateral Damage UC-Davis researchers Robert Feenstra and Chang Hong analyzed (NBER Working Paper No. 27383) the impact of the Phase One agreement on China’s agricultural imports and find that some U.S. allies should be very upset. Holding China’s imports roughly static, the additional sales from the U.S. required under the agreement will be export losses by competing suppliers. Because U.S. agricultural exports to China were actually declining in the years preceding the agreement, the authors calculate that China would have to apply an import subsidy to Americans the equivalent of 42 percent in year one and 59 percent in year two. Looking specifically at China’s imports and their suppliers, the countries most...

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