Costs and consequences of a trade war: a structural analysis

Antoine Berthou, Caroline Jardet, Daniele Siena and Urszula Szczerbowicz

Rue de la Banque, 2018, issue 72

Abstract: Recent US policies (and announcements) and consequent retaliations have increased the threat of a global trade war. This Rue de la Banque provides an assessment of the global macroeconomic short-term implications of higher trade tariffs for the global economy using the International Monetary Fund (IMF) global integrated monetary and fiscal model (GIMF). This quantification takes into account the direct (increase in trade tariffs) and indirect (fall in productivity, rise in financing costs and increase in uncertainty) channels of a global trade war. A global and generalised 10 percentage points (pp) increase in tariffs could reduce the level of global gross domestic product (GDP) by almost 2.0% on impact, and up to 3.0% after two years.

Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:rueban:2018:72

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