The trade balancing act : reconciling domestic and foreign politics.

This paper examines the motives for policymakers in their use of antidumping tariffs. In a scenario where a country is facing domestic political economy influences and foreign political economy influences, I find evidence that countries are not in a repeated "prisoner's dilemma" game, but they are in a game of "chicken." In the repeated tariff-setting game, countries take turns in setting antidumping tariffs to appease domestic producers and minimize injury to relationships with important trading partners. I also find that, when examining the US antidumping tariff decisions specifically, the International Trade Association sets tariffs significantly lower against the most important trading partners, a result shown through OLS and instrumental variables regressions.