Impact of Donald Trump’s tariff increase against Chinese imports on global economy: Global Trade Analysis Project (GTAP) model

Saiful Alim Rosyadi () and Tri Widodo ()

Journal of Chinese Economic and Business Studies, 2018, vol. 16, issue 2, 125-145

Abstract: Donald Trump’s presidential campaign contains several trade protectionism plans. This paper aims to analyze possible global impact of United States’ plan to impose import tariff increase against China. The GTAP model is implemented. The simulations present possible short-run effects of full-protection and manufacturing-only protection with appropriate retaliation response from China. The policy might lead to GDP, terms-of-trade, and welfare decline in United States and China; and an increase in trade balance for United States. Trade diversion pattern is observed in the simulation results, predicting shrinking bilateral trade between the two countries and increasing export toward their third trading partners.

Date: 2018
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DOI: 10.1080/14765284.2018.1427930

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