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Economics

Trade Policy Uncertainty and Exporters' Investment Decisions

Quick fact

Economists estimate that during the US-China trade war, elevated trade policy uncertainty alone reduced US investment by 1–2 percentage points, independent of any tariffs actually imposed.

Why this is interesting

Imagine you're an exporter who has just learned that tariffs might rise next year—or might not. Would you invest in a new factory abroad today, or wait? The answer reveals a hidden cost of uncertainty that can be larger than any actual tariff.

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Trade Policy Uncertainty and Exporters' Investment Decisions

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