THE RESPONSE OF NET EXPORTS TO IMPORT TAXES

Abstract

This paper evaluates the hypothesis that there is an insignificant relationship between net exports (NX) and import tariffs. By analyzing the relationship between import tariffs and NX  for 78 countries from 1970 to 2024, I find that there is a negative and significant relationship between import tariffs and net exports for a global sample and a sample that excludes Africa, Europe, and Latin America and the Caribbean. Two empirical methods are utilized to deal with intellectual uncertainties about data adequacy and parameter estimates: (i) a frequentist regression model that is less suitable for sampling adequacy and stable parameter estimates, and (ii) a Bayesian alternative for credible intervals and sampling adequacy. The paper finds that scatter plots have the potential of generating credible economic misperceptions by diachronic transmissions. The paper concludes that the hypothesis fails to provide general theoretical appeal.