Via Jonathan Dingel, economist Ralph Ossa looks at the gains from trade policy cooperation:
What are the optimal tariffs of the US? What tariffs would prevail in a world-wide trade war? What are the gains from international trade policy cooperation? And what gains can be expected from future reciprocal trade negotiations? I address these and other questions using a unifed framework which nests traditional, new trade, and political economy motives for protection. I find that US optimal tariffs average to 66 percent, world trade war tariffs average to 63 percent, the welfare gains from international trade policy cooperation average to 4.4 percent, and there is almost no scope for future reciprocal trade negotiations.
Here's more on the last part:
the predicted welfare gains and trade responses are small suggesting that there is little scope for future reciprocal trade liberalization. The reason is that the EU, Japan, and the US already impose low tariffs in most industries so that there is little room for further reciprocal tariff cuts. The largest reciprocal tariff cuts are possible in textiles but also only average to 3.29 percent. No tariff cuts at all are possible, for example, in road vehicles since Japan's tariff is already at 0.00 percent in that industry.
