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The economic implications of rising protectionism: a euro area and global perspective

Vanessa Gunnella () and Lucia Quaglietti

Economic Bulletin Articles, 2019, vol. 3

Abstract: The risk of a trade war came sharply into focus in 2018, as protectionist threats by the US Administration and its trading partners were followed by concrete actions. Tensions rose over the summer and, while these have been defused on some fronts, the risk of further escalation remains material. The impact of the measures implemented so far on the global and euro area economic outlooks is expected to remain contained. However, the negative impact could become much greater if trade tensions were to escalate further. Uncertainty related to protectionism is weighing on economic sentiment and it may raise further, potentially eroding confidence and affecting the euro area and the global economy more significantly. The complexity of intertwined international production chains could also magnify the impact. Against this backdrop, this article reviews the changes in the trade policy landscape over the past decade. It discusses the macroeconomic implications of the recent surge in protectionism and evaluates the possible effects that an escalation in trade tensions could have on the global economy and the euro area. JEL Classification: F13, F14

Keywords: International trade; protectionism; tariffs; Trade War (search for similar items in EconPapers)
Date: 2019-04
Note: 2700331
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