Figure 4 provides one explanation for the increased concern over “protectionism” and the associated response. The left panels of Figure 4 take the US and EU model estimates from Table 3 – i.e., based on pre-crisis data – and generate the _predicted_ import protection response over 2008:Q42010:Q4 given the realized macroeconomic data from this period. The historical models for the US and EU predict a sharp increase in import protection beginning in 2009:Q2 and lasting through 2010:Q1, peaking in 2009:Q3. To provide some context, the median number of products subject to new US TTBs against these 15 trading partners per quarter between 1988:Q1 and 2008:Q3 was 12. The model’s US prediction for 2008:Q4-2010:Q4 peaks at _647 products_ being subject to new TTBs in 2009:Q3. The median number of products subject to new EU TTBs against these 15 trading partners per quarter between 1999:Q1 and 2008:Q3 was 9. The model’s EU prediction for new TTBs peaks at _264 products_ in 2009:Q3.

To provide additional context, our back-of-the-envelope calculations suggest the historical models forecast an upper bound of roughly 15 percent of US and EU nonoil imports becoming subject to _new_ import protection during the Great Recession. In particular, the US model predicted that cumulatively 1558 new imported product – trading partner combinations would become subject to new TTB investigations during the period of 2008:Q4 through 2010:Q4. If we multiply the value of imports for a relevant target in 2007 by the predicted number of TTBs, we arrive at an upper estimate that 15.4 percent of US non-oil imports could expect to face new US TTBs.<sup>27</sup> Similarly for the EU, the cumulative effect of its predicted 623 imported product – trading partner TTBs (see again Figure 4) translate into 14.0 percent of EU non-oil imports.<sup>28</sup> Estimates from Bown (2011a) put the tradeweighted share of US and EU imports subject to the existing stock of TTBs at only 2-3 percent immediately preceding the crisis in 2007. The implication is that TTB coverage of imports was predicted to increase 5-7 times above pre-crisis levels.

27 To clarify the thought experiment, the import data used to construct these shares are all taken from 2007, to remove any potential contamination associated with the 2008-9 trade collapse. Nevertheless, the products in focus would not become subject to TTB policies until 2008:Q4-2010:Q4. The mean value of annual imports in 2007 for one of the 94 product – trading partner combinations that were actually confronted with new US TTBs between 2008:Q4 and 2010:Q4 was $133.4 million. The estimate of 15.4 percent is derived by taking this $133.4 million, multiplying it by 1558 product – trading partner combinations, and dividing by $1.34 trillion – i.e., the total US non-oil imports from these 15 trading partners in 2007. The estimate is an upper limit given that product – trading partner combinations affected by US TTBs in the data ($133.4 million) are much higher than the mean product – trading partner combination in the entire sample ($30.2 million) which includes non-TTB affected products.

28 Even though the EU had a much lower predicted count of TTBs (623 versus 1558), the mean value of EU annual imports in 2007 for the 84 relevant product – trading partner combinations was $247.3 million. Finally, EU non-oil imports from its sample of 15 trading partners in 2007 were $1.1 trillion.

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