Eve here. As you can see, the following authors have found that industrial policy still generates net profits after retaliation. This, on average, reduces the profits of companies that revive 25% of industrial policy support on average. The authors appear to shade this finding in a direction that emphasizes the costs of achieving the cost of achieving the export profits at an experience level that naive calculations might assume. However, given that the US and neoliberal infected Eurosk are explicitly introducing industrial policy (as a result of lobbying for Benny rather than default), this finding counters belief in a handoff approach. And as many people are truly calm, including yours, Trump 1.0 history supports the idea that tariffs alone are not fulfilled in generating many manufacturing benefits to the United States without other support policies.
However, there is at least one careful reason to apply this finding to the US and Europe. As more and more widely collected, those passing for leadership in these countries cannot escape from the paper bags. It is therefore an open question of whether these countries can design and implement industrial policies.
Yusheng Feng, Haishi “Harry” Li, Assistant Professor at Hong Kong University of Economics, Siwei Wang, PhD candidate Wuhan University, Min Zhu. Originally published on Voxeu
Industrial policy is increasingly being implemented around the world, with many policymakers and rebuttals highlighting its benefits. However, the costs of industrial policy are not yet understood. Using Chinese firm-level data, this column shows that higher industrial subsidies increase the kikeliofo and rigour of foreign anti-dumping and offsetting obligations at each research stage. These retaliatory tariffs wipe out about a quarter of the company’s revenue growth generated by subsidies. Ignoring this waterway would result in government exaggerating the net profits of industrial policy, promoting deeper trade frictions and geoeconomic fragmentation.
Over the past 20 years, China accounts for about a third of all cases, as shown in Figure 1, and has become a major target for anti-dumping and counter-(AD/CVD) investigations worldwide. Both the frequency of research and job outcomes have increased significantly. By 2020, approximately 15% of China’s exports to the US were subject to AD/CVD tariffs.
Figure 1 Global AD/CVD research and exposure trends in China
Note: Figure 1 shows trends in global AD/CVD studies from 2000 to 2020. Panel (a) reports annual surveys around the world. Panel (b) shows the share of these studies targeting China. Panel (c) presents the share of the survey against China.
Source: Temporary Trade Barrier Database (Signoret etal. 2020) and Author Calculations.
Additionally, subsidized companies are affected. Figure 2 shows that the distribution of tariffs for subsidized Chinese exporters is significantly correct.
Figure 2 AD/CVD mandatory distribution for subsidies and non-subsidized Chinese exporters
Note: This figure compares the distribution of AD/CVD mandatory rates between subsidies and non-subsidized Chinese exporters. Panel (2a) shows the overall distribution of subsidized Chinese exporters, with the blue dashed line representing unsubsidized Chinese exporters. Panels (2b) and (2c) separately show the distribution of large Chinese exporters (more than media assets) and small Chinese exporters (more than media assets) respectively. Corporate size is enabled using lobs on otor assets.
Motivated by these facts, a recent paper (Feng etal. 2025) examines the impact of Chinese subsidies on China’s AD/CVD investigations by combining comprehensive data on Chinese industrial companies with comprehensive data on global space of the AD/CVD incident against China. It was found that higher industrial subsidies lead to more disadvantageous AD/CVD countermeasures at all stages of the AD/CVD survey. Specifically, subsidized products are likely to provide for a Tali State ruling, and are more likely to apply Tali S. This leads to higher Tali subsidies at the corporate level among agricultural subsidies. Among THOs receiving company-specific treatment, higher subsidies are associated with higher allocation of obligation rates.
Retali set about 25% of the positive impact of subsidies on corporate growth. Researchers estimating the impact of industrial policy should explain the associated increase in AD/CVD obligations. Ignoring the cost of this subsidy creates a downwardly omitted variability bias, where the resulting obligations undermine the growth of the company.
AD/CVD obligations will be Signanda Subsidy CCOST for businesses that have been heavily subsidized with subsidies or for such companies’ unique fees
If one penetration point increases in the subsidy rate of a company, we see that the expected AD/CVD tali for the average company in the economy increases by 0.16 percentage points (see Table 5 in the paper). His medium average and effectiveness implies a highly skewed distribution of subsidies rates. Companies that are increasing the subsidy rate from 5% (0%) to 99% (115%) are expected to face an 18 Parker Point increase in foreign AD/CVD Tari€S.
Furthermore, the subsidy information is scrutinized during the investigation, resulting in a significantly greater tariff among companies seeking company-specific tariffs. It can be seen that when one penetration point increases in the grant rate, two percantate points increase in the assigned AD/CVD tariffs (see Table 4 of the paper). At the same time, the probability of reviewing a company-specific rate decreases to 0.7 decomposition points (see Table 3 in the paper). The average product-level tariff is 145%, so the average company-specific tariff is 81%. This has increased 47 perception points in the expected tariffs faced by companies that may be selected for company-specific treatments.
It will significantly erode the benefits of subsidies
The intended benefits of industrial subsidies regarding corporate revenue growth, employment and productivity are partially offset by increased foreign trade protection. Using the device variable strategy, we compare revenue growth over 5 years between companies with different subsidies levels, with and without managing AD/CVD tariffs. If trifing is omitted, we can see that if one percanage point increases in subsidy rate, revenue increases by 1.2% (see Table 10 in the paper). When a TAIFS area occurs, the same subsidies will provide a 1.5% profit. A percentage point of 0.3 prevents retaliation from offsetting approximately 25% of the growth effect of the subsidy. A similar attenuation is observed in corporate therapy employment (17%) and productivity (30%).
Conclusion
Researchers have shown the use of wider lected industrial police in Country Seuss as China (Barwick etal. 2024) and consequently, outflows to other economies (Rotunno and Route 2024). While many policy makers and researchers highlight the benefits of industrial policy (Juhásetal. 2023), our findings reveal hidden costs. This mechanism helps explain the recent parallel rise of industrial subsidies and trade protection. The resulting tariffs should offset approximately 25% of subsidies policymakers aimed at promoting exports. Consideration must be made about how subsidy designs form trade-responsive targeting sectors that rely on alternative non-supply tools that are less likely to cause foreign harm or cause retaliation.
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