Who is subsidising what, and how does it show up in trade flows?

A live register of the major post-2015 industrial-policy packages (IRA and CHIPS in the US, the Net-Zero Industry Act in the EU, Made in China 2025, India’s PLI, Japan’s GX, and Korea’s K-CHIPS) with their stated legal vehicle, enactment date, committed public outlay where officially scored, sectoral scope, and the HS2 chapters they most directly target. Each entry is a cited fact, not an estimate: the source document is linked. Pair this with the BACI sector-exposure bars below to see the magnitude of global trade potentially in policy scope, and with the allied vs non-allied event study to see the post-2022 reshuffling already visible in customs data.

The programs, side by side

Industrial policy is back on the agenda of every major economy after a 40-year eclipse (Juhasz, Lane & Rodrik 2024, “The New Economics of Industrial Policy,” Annual Review of Economics 16). The table below catalogues the biggest post-2015 packages, keyed to their statutory instrument. Where a headline public-outlay figure exists and has been scored by an official body (CBO, statutory text, or national gazette), it is reported verbatim; where no such figure exists, the entry says so. We do not invent numbers.

How much trade sits in each program’s scope

For each program, we translate its stated sectoral scope into HS2 chapters (the mapping is editorial and documented in the program card) and report world trade in those chapters in 2024. This is the exposure frame: the maximum slice of global commerce that could, in principle, be touched by the program’s incentives, tariffs, or local-content rules. Actual intensity of treatment is much narrower and varies by HS6 line.

Trade-flow impact proxy: IRA and CHIPS (both enacted August 2022)

The IRA (P.L. 117-169, 16 August 2022) and CHIPS Act (P.L. 117-167, 9 August 2022) were signed within a week of each other. Both route incentives preferentially toward allied-origin production through local-content rules (IRA Section 30D vehicle credits, Section 45X advanced manufacturing credit) and foreign-entity-of-concern exclusions (CHIPS guardrails). The chart below shows the path of allied-origin vs non-allied-origin exports of goods in the combined HS2 chapters targeted by both acts (HS85, HS87, HS27), indexed to 2021 = 100. “Allied” is operationalised as OECD members plus Taiwan following the friendshoring-discourse taxonomy used in Aiyar et al. (IMF WP/23/100) and Alfaro & Chor (NBER 31560, 2023). The BACI workbench does not include HS6 bilateral flows, so we cannot show US-specific import growth by origin here; the bloc-level export capacity shift is the closest proxy. Global Trade Alert would resolve this by adding intervention-partner resolution (see Figure 4).

The open-data gap: Global Trade Alert

Everything above is inevitably partial. Industrial policy operates through hundreds of instruments (grants, tax credits, loan guarantees, local-content rules, export controls, standards, procurement preferences) across national, sub-national, and SOE channels. No single agency compiles them. The Global Trade Alert project (Evenett & Fritz, 2023) is the canonical third-party database of such interventions, with over 60,000 state acts coded at the product and partner level since 2008. GTA is free for research via its public API. Ingesting it into this workbench would let us replace the seven hand-coded cards above with a machine-readable ledger, connect each intervention to BACI HS6 lines at the partner-resolved level, and run proper difference-in-differences event studies of the sort that Figure 3 can only approximate.

Until then, the three most-cited aggregate reads on post-2022 industrial-policy intensity are: Bown (2023, “Industrial Policy for Electric Vehicle Supply Chains,” PIIE WP 23-1, and Bown & Clausing 2023 on subsidy races); Juhasz, Lane & Rodrik (2024) on the analytical revival of industrial policy in the economics literature; and DiPippo, Mazzocco & Kennedy (2022) on cross-country comparison of industrial-policy spending (China, US, Germany, Japan, Korea, Taiwan, France, Brazil).

Where in the chain does industrial policy bite? BEC-stage composition

Antràs & Chor (2013, Econometrica 81:6) and the Antràs-Chor-Fally- Hillberry (2012, AER P&P) upstreamness measure show that shocks to upstream stages propagate with super-linear multipliers (Baqaee & Farhi 2019, Econometrica 87:4). BEC-stage composition is the coarser cousin. IRA and CHIPS target stages up the chain (cells, wafers, modules, battery-grade materials), where Criscuolo et al. (2022, OECD) argue subsidy effectiveness is highest but leakage to foreign suppliers also greatest. Juhasz, Lane & Rodrik (2024, Annu Rev Econ 16) formalise the trade-off: concentrated upstream dependencies raise the option value of public support, but the welfare multiplier depends on the elasticity of substitution in final demand. The plot below is the descriptive base for that calculation.

How concentrated is world supply in IRA + CHIPS target chapters

For each HS2 chapter the two acts target (HS85, HS87, HS27), we compute HHI, CR₄, and CR₈ on exporter shares of world exports in 2024. HHI = 10,000·Σs² (Hirschman 1945; Herfindahl 1950; US DOJ/FTC 2023 Horizontal Merger Guidelines); CR₄ and CR₈ are the cumulative shares of the top 4 and top 8 exporters (Bain 1951, QJE 65:3; Saving 1970, IER 11:1; Miller-Pauly-Sobel 2000, International Economic Review 41:3). A chapter with HHI > 2,500 (DOJ red zone) and CR₄ > 75% is a chapter where a single subsidy package cannot credibly displace incumbents within the credits’ scoring window; Baldwin (2013) frames this as the “second unbundling” incumbency advantage.

Is IRA reshoring visible yet? 2022 → 2024 exporter-share change in the bounty HS6 lines

The Inflation Reduction Act’s Section 45X credit pays producers per kilogram or per watt for lithium-ion battery cells/modules, solar cells and modules, wind turbine components, and critical-mineral processing; Section 30D conditions the EV credit on critical-mineral and battery-component sourcing. CRS report R47262 (Inflation Reduction Act: Clean Vehicle Credit, 2023) and Bown (2023, PIIE WP 23-1) map these credits onto the narrower HS6 lines below. We compare world-export shares for each HS6 in 2022 (the year of enactment, pre-rulemaking effect) and 2024 (two credit years later), for the six largest exporters per line. Changes ≥ 1 percentage point are large in these fast-moving markets; changes ≥ 3 pp over only two years are unusually sharp. This is not a causal estimate — Chinese overcapacity, post-Covid demand rebounds, and EU battery-passport rules all overlap the IRA window — but it is the first-order descriptive check the Bown (2023, PIIE) literature calls for.

Three years post-2022: world-trade growth in subsidy-tracked sectors

The Figure 7 panels read within-HS6 reshuffles between exporters; this figure asks the complementary capacity question. For each of the four headline subsidy-tracked sectors — solar PV, lithium-ion batteries, electric vehicles, semiconductors — we compute the cumulative growth rate of world export value from 2022 (IRA and CHIPS enactment year) to 2024. A sector where world trade grows much faster than the global-trade baseline (roughly 4-5 per cent a year in nominal USD per WTO 2024 World Trade Outlook) is a sector where subsidy packages helped expand total capacity; a sector where world trade is flat or shrinking is one where subsidy-driven domestic capacity is largely substituting for imports, consistent with the Bown (2023, PIIE WP 23-1) and Juhasz-Lane-Rodrik (2024) distinction between capacity creation and rent reallocation.

Who actually spends on industrial policy: DiPippo-Mazzocco-Kennedy cross-country estimates

Until Global Trade Alert is ingested, the closest comparable cross-country measure of industrial-policy spending is the 2019 reference-year cross-country reconciliation by DiPippo, Mazzocco & Kennedy (2022), Red Ink: Estimating Chinese Industrial Policy Spending in Comparative Perspective (CSIS, May 2022). Their study aggregates direct subsidies, state-investment-fund outlays, below-market credit, tax expenditures, and procurement preferences to a single “direct industrial-policy spending” number as a share of GDP, for nine major economies in 2019 — the last pre-pandemic base year with consistent accounts across all nine. The 1 per cent-of-GDP threshold is a natural cut because it separates China (the only economy in the sample above it) from the rest of the OECD-plus-Taiwan sample. The post-2022 wave (IRA, CHIPS, NZIA, GX, K-CHIPS, PLI) will lift the US, EU, Japan and Korea above their 2019 baselines; DiPippo-Mazzocco-Kennedy is the pre-wave benchmark against which any GTA-based re-estimation must land.

The incumbency wall: China’s share trajectory in IRA + CHIPS-targeted HS6 lines

Figures 7 and 8 read the post-2022 reshuffle. The longer arc behind the subsidy race is a decade of Chinese capacity build in the same HS6 lines. This figure plots China’s share of world exports for each subsidy-tracked HS6 from 2015 to 2024. Bown (2023, PIIE WP 23-1) and Juhasz, Lane & Rodrik (2024, Annu Rev Econ 16) frame the policy question explicitly as incumbency displacement: subsidies must offset accumulated learning-by-doing and scale economies in the dominant supplier, not merely shift a static cross-section. The IRA Section 45X and Section 30D credits, the CHIPS guardrails, the EU NZIA capacity targets, and Korea’s K-CHIPS amendments all sit against the same incumbency baseline this figure draws.

Policy read: IRA, CHIPS, CRMA, dual circulation

The six figures above say this: the HS chapters where IRA / CHIPS / NZIA / CRMA / PLI / GX / K-CHIPS meet each other are concentrated (Figure 6), upstream (Figure 5), and have already begun to reshuffle along the allied vs non-allied seam (Figure 3). The policy question is whether the subsidies move the location of value, not just the location of the last step of assembly. Juhasz, Lane & Rodrik (2024) list the conditions: a learning externality inside the targeted industry, a binding concentration friction that the market cannot unwind on its own, and a credible sunset. China’s dual-circulation response (14th Five-Year Plan, 2021) is the mirror: lean further into domestic consumption of refined outputs while using 2023 export controls (gallium, germanium, graphite) to keep incumbency leverage. The empirical base in Figures 5 – 6 says every program is fighting for the same narrow intermediate-stage HS chapters, and the concentration ratios are high enough that unco-ordinated subsidy races will mainly shift rents across jurisdictions rather than raise world output of the targeted goods.

Caveats and reading guide

• USD commitment figures are not comparable across programs. CBO’s $369B IRA score is a 10-year budgetary cost under the statutory caps as written; the uncapped tax-credit cost is higher. CHIPS’s $52.7B is a statutory appropriation. The EU NZIA has no headline dollar figure because it is primarily a regulatory instrument (capacity target, permitting acceleration) with funding routed through the Strategic Technologies for Europe Platform and the Innovation Fund. China’s Made in China 2025 has no consolidated headline number and is delivered through hundreds of sub-central and state-bank channels (DiPippo et al. 2022 offer the best existing estimate for like-for-like comparison).
• HS2 mapping is editorial. The solar-PV module HS6 line is 854143 (under HS85), the lithium-ion battery line is 850760 (under HS85), the electric-vehicle line is 870380 (under HS87), and the electrolyser/heat-pump machinery lines sit in HS84. We report the broader HS2 chapter for the exposure bars in Figure 2, not the narrower HS6 policy targets; the HS6 cut is in the sourcing-concentration scanner and the critical-minerals pages.
• Allied vs non-allied is a proxy, not a value claim. The OECD + Taiwan partition is the operational cut most closely aligned with how US Treasury officials have described friendshoring since Yellen’s April 2022 Atlantic Council speech; it over- includes some politically awkward members (Turkey, Hungary) and under-includes close US security partners outside the OECD (Philippines, Taiwan aside).

References

• Aiyar, S., Chen, J., Ebeke, C., Garcia-Saltos, R., Gudmundsson, T., Ilyina, A., Kangur, A., Kunaratskul, T., Rodriguez, S., Ruta, M., Schulze, T., Soderberg, G., & Trevino, J. P. (2023). “Geoeconomic Fragmentation and the Future of Multilateralism.” IMF Staff Discussion Note SDN/2023/001; see also IMF WP/23/100.
• Alfaro, L., & Chor, D. (2023). “Global Supply Chains: The Looming ‘Great Reallocation’.” NBER Working Paper 31560.
• Bown, C. P. (2023). “Industrial Policy for Electric Vehicle Supply Chains and the US-EU Fight over the Inflation Reduction Act.” PIIE Working Paper 23-1, Peterson Institute for International Economics.
• Bown, C. P. (2022). “How the United States Solved South Korea’s Problems with Electric Vehicle Subsidies under the Inflation Reduction Act.” PIIE Briefing, December 2022.
• Antràs, P., & Chor, D. (2013). “Organizing the Global Value Chain.” Econometrica 81(6): 2127–2204.
• Baqaee, D., & Farhi, E. (2019). “The Macroeconomic Impact of Microeconomic Shocks.” Econometrica 87(4): 1155–1203.
• Congressional Budget Office (2022). “Estimated Budgetary Effects of Public Law 117-169.” 7 September 2022.
• Criscuolo, C., Gonne, N., Kitazawa, K., & Lalanne, G. (2022). “Are Industrial Policy Instruments Effective? A Review of the Evidence.” OECD Science, Technology and Industry Policy Papers 128.
• DiPippo, G., Mazzocco, I., & Kennedy, S. (2022). Red Ink: Estimating Chinese Industrial Policy Spending in Comparative Perspective. Center for Strategic and International Studies.
• Evenett, S. J., & Fritz, J. (2023). The New Subsidy Era: Global Trade Alert Annual Report 2023. St. Gallen: University of St. Gallen / Global Trade Alert.
• Juhasz, R., Lane, N. J., & Rodrik, D. (2024). “The New Economics of Industrial Policy.” Annual Review of Economics 16: 213–242.
• U.S. Congress (2022). Inflation Reduction Act of 2022, H.R. 5376, Public Law 117-169. Enacted 16 August 2022.
• U.S. Congress (2022). CHIPS and Science Act of 2022, H.R. 4346, Public Law 117-167. Enacted 9 August 2022.
• European Parliament and Council (2024). Regulation (EU) 2024/1735 establishing a framework of measures for strengthening Europe’s net-zero technology products manufacturing ecosystem (Net-Zero Industry Act). OJ L series, 28 June 2024.
• State Council of the People’s Republic of China (2015). Notice Guofa [2015] No. 28, “Made in China 2025.” 8 May 2015.
• Press Information Bureau, Government of India (2020, 2021). Cabinet decisions on the Production-Linked Incentive schemes. PIB releases 11 November 2020 and subsequent.