21st Century Trade Wars

Edward Balistreri and Russell Hillberry

Chapter 9 in Policy Analysis and Modeling of the Global Economy:A Festschrift Celebrating Thomas Hertel, 2021, pp 279-297 from World Scientific Publishing Co. Pte. Ltd.

Abstract: We use the Global Trade Analysis Project (GTAP) data in a GTAP-in-GAMS framework to calculate the economic effects of trade policies proposed by candidate Donald Trump in his successful campaign to become President of the United States. We calibrate a multi-sector multi-regional equilibrium with Melitz (2003) technologies in the manufacturing and business services sectors. We calculate optimal bilateral tariffs against China and Mexico and consider their optimal responses. In a more detailed look at Mexico we consider the 35% US tariff on Mexican imports that Trump proposed during the campaign, and the 20% tariff on Mexican imports that was suggested shortly after he took office. We model optimal Mexican responses as well as responses that would be consistent with its World Trade Organization disciplines.

Keywords: Computable General Equilibrium Modeling; CGE Models; Trade Policy Modeling; GTAP; Global Trade Analysis Project; Trade Impact Assessments; Sustainability Impact Assessments; Trade and Employment; Trade and Climate; Globalization; Preferential Trade Agreements; Thomas Hertel (search for similar items in EconPapers)
JEL-codes: C68 F13 F18 Q54 Q56 (search for similar items in EconPapers)
Date: 2021
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Working Paper: 21st century trade wars (2017)
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