Quantifying the Trade Impact of SPS and TBTs with Product-level Structural Gravity

Non-tariff measures (NTMs), particularly sanitary and phytosanitary measures (SPS) and technical barriers to trade (TBTs), have become essential components of climate, industrial, and regulatory policies and affect the majority of global trade. However, it is generally challenging to quantify their effects on trade using a standard gravity model, due to their generally non-discriminatory nature. Using a multistage structural gravity estimation strategy combined with a control-function correction for endogeneity, we estimate the trade elasticities and ad valorem equivalents of NTMs at the HS6 level for over 5,000 products. Our results reveal significant heterogeneity in tariff-equivalent NTM effects, especially in environmentally relevant sectors, such as clean technologies and electric vehicles. These estimates can inform regulatory impact assessments and general-equilibrium analyses of climate-aligned trade policies.