📐Thrilled that our paper is out at @JIntlEcon!. The triangle inequality (TI) has been largely overlooked in quantitative exercises, even though it has important implications for them! A 🧵 1/12.

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We thank the referees and the editor for their thoughtful feedback. Feel free to reach out if you have any questions! 5/5.

Summary of the paper: .4/5.

US tariffs: Large tariff increases destroy firms’ sunk investments. As a result, these tariffs have long-lasting effects, even if they’re short-lived. Reverting tariffs to old levels won’t simply restore trade flows to pre-trade war levels. 3/5.

Timing: What if some countries liberalize trade earlier than others? When major trade partners cut barriers first, they gain a first-mover advantage, which boosts export growth relative to late liberalizers and makes global trade more concentrated overall. 2/5.

Thrilled to see our paper forthcoming @JEEA_News!. We show how incumbent firms shape international trade (🧵linked below). Some implications: Timing of trade liberalization matters, and planned surge in US tariffs can have long-lasting effects, even if tariffs are temporary. 1/5.

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RT @AGGraziano: I think many would agree that today it’s key to understand the price impact of tariffs. We show average import prices rose….

RT @AndrewG_PhD: Let's put a 25% tariff into context. Here's a (brief) US tariff history back to 1900. In 1972 the US average tariff rat….

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More theory and results in the paper. We thank the referees and editors (especially @TrebAllen !) for their thoughtful feedback. Get in touch and let me know if you have any questions! 12/12

Finally, we connect our results to the quantitative econ geography literature (Allen and Arkolakis, 2022). Accounting for TI violations brings the counterfactual predictions substantially closer to counterfactuals where we shock the explicit transportation network (Sec. 6). 11/12.

Note: While we use the competitive EK model to illustrate the TI’s role in quantitative analyses, the logic underlying the TI relies on cost minimization, a principle independent of the market structure and, thus, general. 10/12.

This has significant implications for the welfare gains from the liberalization: When countries can re-route (i.e., exploit TI violations), the median country’s real income growth increases from 19% to 30%. 9/12

Taking the TI seriously has substantial quantitative implications: In a standard EK model, a 25% global drop in TCs leads to TI violations for 40% of country pairs, meaning these pairs would profit from re-routing. The trade-weighted share is 34%. 8/12.