The International Spillover Effects of Trade Policy Uncertainty on the Seasonal Reallocation of US Imports

ABSTRACT Prior to China's accession to the World Trade Organization (WTO) in 2001, US tariffs on Chinese products depended on the annual congressional renewal of Most‐Favored‐Nation (MFN) status. Recent empirical evidence suggests that US importers responded by stockpiling Chinese goods before the renewal month to hedge against the risk of higher tariffs if the renewal were unsuccessful. This paper examines whether the elimination of this trade policy uncertainty had international spillover effects on the seasonality of US imports from other major trading partners. Using HS 6‐digit product‐level data from 1991 to 2007, I estimate how the timing of monthly US imports shifted across countries following China's WTO accession. The estimation results show significant shifts in the seasonality of US imports from Canada, Mexico, Indonesia, Malaysia, South Korea, Taiwan, Thailand, and the United Kingdom. Furthermore, the magnitude and direction of these spillover effects vary systematically with product characteristics. In particular, the effects are stronger for products in which exporting countries held larger US market shares and for goods intended for final consumption, or that are durable.