trade diversion · Julian Hinz

The EU–India Trade Deal: Strategic Diversification in an Era of Uncertainty

Julian Hinz — Thu, 01 Jan 2026 00:00:00 +0000

The brief studies an EU–India free trade agreement as a strategic diversification tool in a more uncertain trade environment. Simulations point to mutual welfare gains, substantially higher bilateral trade, and a meaningful reallocation of trade away from China.

For India, the agreement provides a hedge against US tariff pressure. For the EU, it supports de-risking and signals a commitment to open trade. The structural benefits are framed as a long-term partnership rather than a temporary response to current policy shocks.

The Consequences of the Trump Trade War for Europe

Julian Hinz — Tue, 01 Apr 2025 00:00:00 +0000

Using the KITE model suite, we study the economic costs of the Trump tariff policy for Europe, and analyze the potential for trade diversion from China. - If the current tariff regime stays in place, trade between the U.S. and China would fall dramatically, hurting mainly the U.S. and the Chinese economies. The direct economic impact for Europe appears limited. - The expected rerouting of Chinese and U.S. exports to third countries is likely to intensify competition between European and Chinese producers in key markets. European consumers stand to benefit from lower prices.

Shooting down trade: Firm-level effects of embargoes

Uğur Aytun — Sat, 01 Mar 2025 00:00:00 +0000

Imposition and lifting effect of the embargo.

In November 2015, Turkey’s unexpected downing of a Russian military jet in Syria prompted Russia to impose a swift and comprehensive embargo on specific Turkish exports. This study leverages this quasi-natural experiment to estimate both the immediate and longer-term effects of the imposition and subsequent lifting of these sanctions. Utilizing administrative data encompassing all Turkish exporters, we first examine the impact on trade at the firm level, assessing the direct effects of the embargo, the redirection of trade to alternative markets, and the circumvention through other products. Second, we investigate broader repercussions on domestic operations, including firms’ sales, procurement, and employment. Our findings show that while the embargo caused immediate and substantial declines in exports of affected products to Russia, firms partially mitigated these losses through trade diversion. Although relative trade patterns normalized post-sanctions, absolute trade values remained subdued. The analysis reveals that affected firms experienced declines in domestic sales and supplier relationships, with temporary disruptions in employment. However, most negative effects dissipated following the embargo’s removal, except for some persistent reductions in procurement and supplier links, likely linked to the persistent lower trade volumes even after the embargo ended. These results contribute to the understanding of sanctions’ broader economic implications and the resilience of firms facing trade disruptions.

Navigating Trade Restrictions

Vasily Astrov — Thu, 01 Feb 2024 00:00:00 +0000

This report focuses on Russia’s adaptation in its commodity exports during 2023, amidst ongoing international sanctions. It examines the shifts in export and maritime shipping patterns, emphasizing coal, crude oil, and liquefied natural gas, and their redirection towards alternative, non-sanctioning markets. The analysis details Russia’s efforts to maintain its commodity exports by leveraging new maritime routes and - possibly - spoofing Automatic Identification System (AIS) signals to avoid detection of ship-to-ship transfers of oil.