2025

This paper examines the impact of strategic trade policy interventions, specifically tariffs, on wages and welfare using a two-country general oligopolistic equilibrium (GOLE) model. Contrary to findings in partial equilibrium frameworks, the study finds that tariffs do not affect domestic wages and instead reduce the welfare of the tariff-imposing country. It further explores whether tariff revenue can compensate affected workers and finds that when only final goods are traded, worker compensation is feasible beyond a specific tariff threshold, which depends on foreign tariff rates. However, when both final and intermediate goods are traded, the results reverse, meaning that tariff revenue can only compensate workers up to a certain tariff level, as tariffs may lower overall labor demand. These findings are policy-relevant in light of the growing integration of developing economies into Global Value Chains (GVCs) and the renewed use of tariff protectionism worldwide, highlighting the potential trade-offs between protectionist policies and labor market outcomes.

This paper examines the Trump administration's potential use of Section 891 of the Internal Revenue Code and pending legislation as tools to impose retaliatory taxes on foreign countries that enact “discriminatory or extraterritorial” taxes targeting U.S. multinationals. Section 891, a rarely invoked provision, allows the U.S. to double the tax rates on corporations and individuals from countries that impose discriminatory taxation on U.S. businesses.

This paper examines mandatory binding arbitration as a dispute resolution mechanism in the post-BEPS landscape, particularly in the context of African countries implementing the OECD’s tax reforms. This paper evaluates the benefits and risks of arbitration, particularly within the realities of African tax systems, and ultimately advocates for its adoption as the preferred dispute resolution mechanism despite existing concerns. It argues that arbitration offers a more efficient, predictable, and enforceable approach to resolving tax disputes, positioning African countries to navigate the complexities of the post-BEPS international tax framework effectively.

This article examines how states respond to foreign economic coercion, arguing that sanctions trigger broader security concerns that incentivize governments to protect a wide range of domestic firms, not just those directly targeted. Using an original dataset of U.S.-sanctioned Chinese firms, the study explores how China shields its industries from U.S. sanctions. The research finds that China not only subsidizes sanctioned firms but also extends support to other domestic firms competing for the same government contracts. This protective strategy ensures supply chain resilience and encourages domestic firms to maintain normal business operations within sanctioned industries. The findings offer new insights into the intersection of geopolitics and industrial policy, illustrating how governments leverage state intervention to counteract economic warfare and sustain strategic industries.

This report examines the economic implications of escalating trade tensions in North America, focusing on the Trump administration’s tariff policies. At the time of publication, the administration had threatened and then paused a 25 percent tariff on Canadian and Mexican goods, prompting retaliatory preparations from both countries. Following the pause, Trump proceeded with a 25 percent import tax on steel and aluminum starting in March 2025, alongside plans for reciprocal tariffs on U.S. trading partners. The report documents varying perspectives on these trade conflicts and analyzes their broader economic consequences for North America and beyond, highlighting the potential disruptions and policy responses shaping international trade dynamics.

This commentary analyzes the CJEU’s decision of September 10, 2024, which overturned the General Court’s previous ruling in the Apple State aid case, ordering Apple to repay €13 billion plus interest to Ireland for unlawful State aid. The focus is on the Commission’s primary line of reasoning, which formed the basis of the appeal, divided into three key aspects: (i) the General Court’s misinterpretation of the Commission’s profit allocation analysis for Apple’s Irish branches (ASI and AOE), (ii) its treatment of Apple Inc.’s functions in profit allocation, and (iii) its infringement of the separate entity approach, the arm’s length standard (ALS), and Article 107 TFEU. The commentary concludes that the CJEU’s decision is problematic from a strict legal perspective for several reasons. First, it implicitly confirms that the Commission has a new prerogative to use the ALS (as outlined in the AOA) to assess Member States’ profit allocations. Second, it treats transfer pricing as an exact science, allowing the Commission to scrutinize methodological errors in determining the "correct" profit allocation. Third, it raises concerns about the burden of proof in State aid cases, creating uncertainty in legal standards. Finally, it illustrates how legal rules can be molded to serve political interests, as in this case, where anti-avoidance concerns were effectively disguised as anti-subsidy enforcement.

This article examines the relationship between the U.S. current-account deficit with China and its capital-account surplus, highlighting how U.S. tax policy influences capital inflows and trade imbalances. While it is widely understood that reducing imports from China would lower capital inflows, the article argues that the reverse is also true—eliminating U.S. tax subsidies for foreign capital imports would reduce Chinese investment in U.S. assets, thereby decreasing China’s incentive to export goods to the U.S. in exchange for dollars. The authors propose a series of tax reforms aimed at reducing the returns on U.S. portfolio investments by Chinese entities, including the Chinese government and its sovereign wealth fund. These reforms could lower China’s goods-trade surplus with the U.S. by 16% while avoiding the tariffs' economic drawbacks. Additionally, these reforms could increase foreign tax revenue, support U.S. domestic production, and help retain American assets within the U.S.

This article examines the potential constitutional challenges to taxation without realization in light of the U.S. Supreme Court’s decision in Moore v. United States. The ruling raised the possibility that the Court might eventually declare realization a constitutional requirement for taxation. The U.S. exit tax on expatriations is identified as the most likely candidate for a post-Moore challenge, given that it: (a) applies to individual taxpayers, (b) is imposed directly rather than through attribution, and (c) resembles the mark-to-market tax at the center of the Moore litigation, particularly targeting wealthy taxpayers who may fund such a challenge. A case challenging the exit tax could force the Court to directly address the question it avoided in Moore: whether the Sixteenth Amendment permits Congress to tax unrealized income without apportionment among the states. The article underscores how this issue remains unresolved and may have significant implications for the future of U.S. tax law.

This article examines the impact of the 2018–2019 U.S.-China trade conflict on exchange rates and trade prices, highlighting how the appreciation of the U.S. dollar (USD) influenced Chinese export pricing. The study finds that Chinese exporters significantly lowered their prices in response to the USD appreciation, effectively offsetting much of the impact of U.S. tariff hikes on post-tariff import prices. This effect was particularly pronounced for intermediate goods, which constitute a major share of Chinese exports to the U.S. The findings suggest that if U.S. trade policy itself contributed to the USD appreciation, it may have had self-defeating consequences, as the tariff-induced price increases were largely neutralized by Chinese price reductions.

This article challenges the common perception of international financial centers (IFCs), often labeled as "tax havens," as facilitators of tax evasion and money laundering. Through an extensive analysis of tax treaties, regulatory statutes, and historical literature, it examines the evolution of the global information exchange network and its role in integrating IFCs into the global financial system while restricting their use for illicit activities. The expansion of Mutual Legal Assistance Treaties (MLATs), Tax Information Exchange Agreements (TIEAs), and the OECD's Common Reporting Standard (CRS) has significantly reduced financial secrecy worldwide. The article also highlights regulatory transformations within IFCs, including the development of licensing systems, independent regulatory bodies, and compliance-driven practices. It argues that reputable IFCs now function as compliant financial hubs, much like larger onshore financial centers, rather than as enablers of misconduct. This nuanced perspective suggests that while the global financial system remains imperfect, it has made significant strides in limiting financial opacity and increasing international cooperation. Today, tax authorities have access to offshore account information through multiple established channels, including CRS-mandated annual financial account exchanges and bilateral tax treaties, ensuring greater transparency and accountability.

This article examines whether anti-tax avoidance regulations help reduce industry concentration by leveling the playing field between large and small firms. Using administrative data and analyzing the implementation of such regulations across 17 European countries, the study finds that while these rules successfully reduce tax avoidance, they have no significant impact—statistically or economically—on industry concentration. Robustness checks confirm that the lack of effect is genuine, rather than a result of insufficient statistical power. The study further explains that this outcome arises because anti-tax avoidance measures reduce tax benefits for both industry leaders and their competitors equally, limiting their influence on market structure. These findings challenge the claim that broad-based tax avoidance policies can meaningfully alter industry concentration dynamics.