Title

The U.S.–China trade war: Tariff data and general equilibrium analysis

Campus Units

Economics, Center for Agricultural and Rural Development

Document Type

Article

Publication Version

Submitted Manuscript

Publication Date

8-2020

Journal or Book Title

Journal of Asian Economics

Volume

69

First Page or Article ID Number

101216

DOI

10.1016/j.asieco.2020.101216

Abstract

The current trade war between the United States and China is unprecedented in modern history. This study introduces a database of tariff increases resulting from the recent trade war and quantifies the impacts using the canonical GTAPinGAMS model calibrated to the recently released GTAP version 10 accounts. We find that the tariff increases as of September 2019 decrease welfare in China by 1.9% and welfare in the U.S. by 0.3%. Impacts on sectoral revenue are reported for both countries. China’s exports to and imports from the United States are reduced by 58.3% and 50.7%. Most of the reductions in bilateral trade are absorbed by trade diversion to other countries. The welfare and U.S.-China bilateral trade impacts are exacerbated by additional tariffs threatened by the United States and corresponding retaliations from China. Sensitivity analysis is conducted by increasing and decreasing import substitution (Armington) elasticities by two standard deviations. This has modest impacts on welfare and trade flow results.

JEL Classification

F11, F12, F17

Comments

This is a working paper of an article published as Li, Minghao, Edward J. Balistreri, and Wendong Zhang. "The US–China trade war: Tariff data and general equilibrium analysis." Journal of Asian Economics 69 (2020): 101216. doi: 10.1016/j.asieco.2020.101216. Posted with permission.

Copyright Owner

Elsevier Inc.

Language

en

File Format

application/pdf

Published Version

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