Economic Impacts of the USâ€“China Trade War on the Asian Economy: An Applied Analysis of IDE-GSM
Ikumo Isono and
Kazunobu Hayakawa ()
Journal of Asian Economic Integration, 2021, vol. 3, issue 2, 127-143
In this article, we attempt to estimate the economic impacts of the USâ€“China trade war that began in 2018. We used IDE-GSM, a computational general equilibrium simulation model, to estimate the economic impacts of a â€˜full-confrontationâ€™ scenario wherein both countries impose 25% additional tariffs on all goods imported from each other for 3 years 2019 onwards. In our calculation, the economic impact for the United States is âˆ’0.4% and âˆ’0.5% for China. Some Asian countries benefit from the trade war. As far as it remains bilateral, the trade war is only an issue for the concerned parties. We also ran the USâ€“world trade war scenario, wherein the United States and all other countries impose a 25% additional tariff on all goods. The negative impact on the global economy is â€“0.8%, much more significant than the 0.1% impact from the USâ€“China trade war. Thus, it is clear that the world cannot afford to engage in a multilateral trade war. JEL Codes: C68, F13
Keywords: USâ€“China trade war; IDE-GSM; simulation analysis; CGE model (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:sae:jfasei:v:3:y:2021:i:2:p:127-143
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