A robust analysis of trade policy: the chicken and softwood lumber wars

Abstract

PurposeThe paper extends the robust political economy framework to analyze the impact of tariffs on the entrepreneurial market process. It proposes that the unintended consequences of using trade policy to bolster a nation's economy will inevitably prevent an economy from allocating its resources to their highest-valued use. The study aims to expand the robust political economy literature to international trade.Design/methodology/approachThe paper develops a robust analysis of trade policy and illustrates it with two case studies of trade wars: The Chicken War (1963) and the US–Canada softwood lumber disputes (1982-present).FindingsThe paper provides theoretical insights into how the entrepreneurial market process is distorted by trade barriers. The case studies show that the theoretical insights have real-world implications that should not be ignored when planning trade policy.Originality/valueThis paper applies a robust political economy framework to international trade.