Trade reform leads to 5.7% increase in lifetime consumption welfare.
The article explores the benefits of removing trade barriers for different types of businesses. By studying how firms decide to export based on their productivity and costs, the researchers found that getting rid of tariffs worldwide can lead to significant welfare gains. They discovered that these gains are even higher when considering the process of transitioning to a tariff-free environment. In fact, eliminating a 5% tariff rate could increase welfare by 5.7% of lifetime consumption. Additionally, the trade to GDP ratio would go up by 12.6% due to more businesses participating in exporting.