ACWI - Trade Balances Mostly Driven By Economic Forces Not Tariffs
By IMFBlog
Over the past two decades, most of the changes in bilateral trade balances - the difference in the value of exports and imports between two countries - were explained by macroeconomic factors, according to IMF research.
These factors include fiscal policy, demographics, and weak domestic demand. They may also include exchange rate policies and domestic supply-side policies, like subsidies to state-owned enterprises or to export sectors.
In contrast, changes in tariffs played a much smaller role in influencing trade balances.
Our chart of the week from the April World Economic Outlook quantifies the