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IMF Working Paper WP/23/99 examines the use of temporary trade barriers (TTBs) as a form of retaliation. The authors construct a novel sectoral measure of retaliation using daily bilateral data on TTB responses in 1220 subsectors across a panel of 25 advanced and emerging market economies over 1989-2019. The results suggest that within-year responses are more important in terms of intensity and frequency than commonly understood from the existing literature. The authors also find that TTBs are more likely to be introduced in response to import competition and when the retaliating country has a smaller share of the world market. Overall, the findings suggest that TTBs are strategic in nature and can have significant economic implications.
