The economic impact of the US-China trade dispute

Lars Nilsson () and Stephan Nolte
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Lars Nilsson: European Commission
Stephan Nolte: European Commission

International Economics and Economic Policy, 2023, vol. 20, issue 4, No 8, 709-728

Abstract: Abstract This paper departs from the Trump administration’s main trade policy objective, i.e. to reduce the US trade deficit, which it considered to be harmful to the US economy. The main means for doing so has been to increase in import tariffs, despite most economists’ view that a country’s trade balance is driven by macroeconomic factors such as savings and investment rather than by trade policy. The paper reviews the various steps taken in the US trade dispute(s), primarily with China, including steps towards de-escalation in the final year of the Trump presidency. It then assesses the economic impact of the US trade dispute with China and the Phase One Deal, using computable general equilibrium (CGE) techniques. Importantly, it does so by updating the database to reflect the consequences of the shale gas revolution on US energy production and trade. Results are presented not only for the USA and China, but also on their trade with third countries by broad product category.

Date: 2023
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DOI: 10.1007/s10368-023-00574-9

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