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The Trade War in Numbers

Karyne Charbonneau and Anthony Landry ()

Staff Working Papers from Bank of Canada

Abstract: We build upon new developments in the international trade literature to isolate and quantify the long-run economic impacts of tariff changes on the United States and the global economy. In particular, we apply the most recent data and trade elasticity estimates to the Ricardian model of Caliendo and Parro (2015) to quantify the long-run impacts of the recently applied and proposed tariff changes, including the U.S. tariffs on steel and aluminum imports and the rounds of additional tariffs between the United States and China. To fit the reality of the current trade policy shift, our analysis also allows for quotas and endogenizes trade balances. Overall, our results suggest that the newly imposed and proposed tariff schemes imply considerable changes in trade flows and sectoral output reallocations, but modest impacts on long-run aggregate prices and output levels.

Keywords: Recent economic and financial developments; Trade Integration (search for similar items in EconPapers)
JEL-codes: F11 F13 F14 F15 F50 F62 F68 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2018
New Economics Papers: this item is included in nep-int
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Handle: RePEc:bca:bocawp:18-57