On the dark and grey side of protectionism: evidence from the EU sectors

This paper investigates the impact of foreign trade protectionism on sectoral performance in the 27 member countries of the European Union (EU), focusing on productivity and wages. Using comprehensive data from the Global Trade Alert database, this study systematically assesses how various tariff-and non-tariff barriers implemented abroad affect EU industrial sectors. To address potential endogeneity, a dynamic panel data approach is applied. The findings reveal a mixed picture: while foreign trade protectionism tends to depress sectoral wages, productivity exhibits some gains, suggesting that firms may respond with efficiency improvements to mitigate adverse effects. These results contribute to the limited but growing body of research on the broader consequences of protectionism, particularly the impact of non-tariff trade barriers on affected economies.