Papers & Reports

This policy brief examines the growing transatlantic divide in responses to China’s export overcapacity, particularly in sectors critical to economic growth and national security. Triggered by concerns that Chinese industrial subsidies—not comparative advantage—are driving export success, the U.S. and EU have adopted divergent strategies. While the U.S. has embraced unilateral trade measures, most dramatically under President Trump’s decision to impose a 145 percent tariff on Chinese goods, the EU continues to emphasize compliance with global trade rules. The brief explores how these differing approaches reflect broader contrasts in trade and industrial policy, and considers the potential for coordinated action. It argues that the EU is well-positioned to lead efforts within the rules-based trading system and should keep the door open for future U.S. alignment, aiming to address Chinese overcapacity through collective pressure rather than fragmentation.

This policy briefing by the Peterson Institute for International Economics (PIIE) assesses the fiscal and macroeconomic consequences of universal U.S. tariff increases under President Donald J. Trump’s proposed trade policy. Using a global economic model, the briefing estimates that a 15 percentage point tariff on all imports could raise $3.9 trillion in federal revenue over 2025–2034 if there is no foreign retaliation, but this gain would be reduced to $3.2 trillion after accounting for negative economic impacts, and further down to $1.5 trillion if trading partners retaliate. Notably, higher tariffs do not guarantee higher revenue; a 20 percentage point increase results in only $791 billion in net gains due to amplified economic damage and retaliation. Across all scenarios, the United States would face lower GDP, investment, employment, and real wages, alongside higher short-term inflation. Sectors most exposed to export markets—agriculture, mining, and manufacturing—would bear the brunt, especially if foreign retaliation targets U.S. exports. The briefing underscores the trade-off between revenue generation and economic harm, warning that broad-based tariffs risk undermining long-term economic health even as they increase government receipts.

This article argues that the WTO has become irreparably dysfunctional and should be retired as a multilateral institution. Once hailed as a superior successor to GATT with its Appellate Body celebrated as an antifragile mechanism for resolving trade disputes, the WTO has failed to adapt its rules to modern economic realities and has become increasingly ineffective at enforcing its own legal framework, particularly in the face of growing reliance on national security exceptions and the collapse of its adjudicative functions. Applying Taleb’s concept of antifragility, the article contends that the WTO no longer strengthens under stress but instead has become fragile and inert, unable to innovate or govern the evolving global trade environment. It concludes that the WTO's institutional decline is beyond reform, and that the international community should move toward new structures better equipped to serve the demands of contemporary global trade.

This article examines the emerging “tax decluttering movement,” driven by global actors such as the OECD and European Union, which encourages countries to repeal or streamline their domestic anti-abuse tax rules in light of the new global tax agreement negotiated in 2021 by over 140 countries. While the push for decluttering is based on the claim that national rules are now redundant or overly burdensome, the article stresses that the multilateral regime remains untested and incomplete. It introduces an analytical framework to understand the movement, highlighting a convergence of interests among influential actors—including international organizations, regional blocs, and corporate stakeholders. The article explores the political economy implications of tax decluttering, particularly how it reshapes the distribution of tax lawmaking authority between national and transnational levels, intensifies institutional competition among global tax bodies, and alters the strategic calculus of states competing for investment and geopolitical influence. It concludes with a cautionary stance, arguing that premature decluttering carries significant risks, and offers practical guidance for legislatures navigating this evolving tax policy landscape.

This article explores how the advent of global minimum taxes transforms the foundational assumptions of international corporate tax policy, shifting the focus from whether corporate income will be taxed to which governments will collect the tax, and at whose expense. Historically, the possibility that a corporation might avoid income taxation altogether was central to tax planning and policy concerns. In contrast, the current global tax landscape, driven by frameworks like Pillar Two, increasingly ensures that corporate profits will be taxed somewhere, if not immediately, then eventually. This reorientation elevates questions of cross-border equity and wealth distribution, bringing to the forefront the role of corporate taxation as a mechanism for international redistribution. The article argues that under this new paradigm, corporate income taxes should be understood as tools for reallocating global wealth among nations, thereby requiring normative analysis that explicitly accounts for international distributive justice and fiscal sovereignty. 

This article examines the IMF’s evolving analysis of economic spillovers since 2011, emphasizing why international corporate taxation has become a key concern. Initially focused on the external effects of the five largest economies—China, the Euro Area, Japan, the UK, and the US—the IMF’s spillover reports later adopted a thematic lens to highlight issues with cross-border significance. The prominence of international taxation in these reports stems from its implications for macroeconomic stability and the rising global attention on multinational tax avoidance. The article underscores how these concerns have been elevated in multilateral policy dialogue to promote coordinated international responses.

This article analyzes the unequal inflationary impact of U.S. tariffs across socio-demographic groups using a structural vector autoregression model that accounts for key macroeconomic variables including oil prices, output growth, policy rates, and exchange rates. It estimates an aggregate tariff pass-through to inflation of 0.53, with tariffs contributing to 18% of overall inflation volatility. Disaggregated findings reveal that while lower-income groups face a smaller pass-through, they endure greater volatility in inflation due to tariffs. Among occupations, armed forces personnel face the highest pass-through, and students the lowest. By race, Native Americans are most affected, while unclassified racial groups experience the least impact. The lowest pass-through occurs among individuals aged 75 and older, followed by those under 25. This article concludes with targeted policy recommendations aimed at reducing the disproportionate inflationary burden tariffs impose on vulnerable demographic groups.

This article argues that the global minimum tax, while designed to curb tax competition over profits, may inadvertently intensify competition for real investment. By imposing a floor on effective tax rates, jurisdictions can no longer attract multinationals through profit shifting alone, prompting them to compete more aggressively on non-tax factors such as subsidies, regulatory concessions, or infrastructure support to attract real business activity. This article offers the first formal analysis of this trade-off, revealing counterintuitive consequences and proposing reforms to the global minimum tax that address this unintended dynamic. In doing so, it sheds light on broader tensions in international tax policy and legal theory, particularly regarding the shifting boundaries between legitimate competition and harmful tax practices.

This paper analyzes the America First Trade Policy introduced under President Trump as a fundamental shift in U.S. trade strategy, emphasizing the use of tariffs to reduce trade deficits and address national security concerns. Drawing on natural experiments such as Section 232 and 301 tariffs and Brexit, the paper shows that conventional trade theory—which predicted inefficiencies and economic losses—was vindicated by these outcomes, casting doubt on the policy’s likely success. It further draws a historical parallel with the Nixon Measures of 1971, arguing that, like then, uncoordinated and abrupt departures from established economic norms are likely to trigger unpredictable systemic consequences, including disruptions in global finance, supply chain shifts, and geopolitical instability. The paper concludes that the America First Trade Policy is undermined by internal contradictions within populist trade economics, and poses significant risks of unintended, destabilizing effects on the global economic order.

This article explores the underexamined area of sovereign tax immunity—the federal income tax treatment of foreign governments investing in the United States—arguing that it has significant potential as a national security tool. Amid growing calls to reconceptualize taxation through a national security lens, the article critiques recent legislative proposals that seek to modify sovereign tax immunity without fully considering their broader implications. Through an interdisciplinary analysis spanning tax law, national security policy, and international law, the article warns that altering the U.S. approach to sovereign tax immunity risks conflicting with established interpretations of customary international law, potentially undermining the legitimacy of international norms, harming U.S. diplomatic relationships, and provoking retaliatory actions. While recognizing the strategic utility of sovereign tax immunity, the article emphasizes that changes must be carefully crafted to avoid unintended diplomatic and legal consequences. It concludes by proposing a legislative framework for leveraging sovereign tax immunity in a way that aligns with U.S. foreign policy and national security interests while preserving international legal coherence and credibility.