Economic Effects of the USA - China Trade War: CGE Analysis with the GTAP 9.0a Data Base

Enkhbayar Shagdar and Tomoyoshi Nakajima ()
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Tomoyoshi Nakajima: Economic Research Institute for Northeast Asia (ERINA)

No 1806e, Discussion papers from ERINA - Economic Research Institute for Northeast Asia

Abstract: An analysis of the economic effects of the ongoing USA-China trade war using the standard CGE Model and GTAP Data Base 9.0a revealed that both parties will be worse-off from this trade friction, having welfare losses and real GDP contractions regardless of international capital mobility status—i.e. whether the capital is internationally mobile or not. Moreover, the results indicated that the negative economic and trade impacts on China would be larger compared to those of the USA. Although, other countries and regions would be better-off having positive changes in their welfare and real GDP, their magnitudes were much lower than losses of the USA and China. Therefore, as a whole, the global economy will be worse-off as a result of this trade war between the world's two largest economies, the USA and China.

Keywords: Trade policy; CGE models (search for similar items in EconPapers)
JEL-codes: C68 F13 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2018-12
New Economics Papers: this item is included in nep-cmp and nep-int
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