IDEAS home Printed from https://ideas.repec.org/a/kap/iecepo/v20y2023i4d10.1007_s10368-023-00574-9.html
   My bibliography  Save this article

The economic impact of the US-China trade dispute

Author

Listed:
  • Lars Nilsson

    (European Commission)

  • Stephan Nolte

    (European Commission)

Abstract

This paper departs from the Trump administration’s main trade policy objective, i.e. to reduce the US trade deficit, which it considered to be harmful to the US economy. The main means for doing so has been to increase in import tariffs, despite most economists’ view that a country’s trade balance is driven by macroeconomic factors such as savings and investment rather than by trade policy. The paper reviews the various steps taken in the US trade dispute(s), primarily with China, including steps towards de-escalation in the final year of the Trump presidency. It then assesses the economic impact of the US trade dispute with China and the Phase One Deal, using computable general equilibrium (CGE) techniques. Importantly, it does so by updating the database to reflect the consequences of the shale gas revolution on US energy production and trade. Results are presented not only for the USA and China, but also on their trade with third countries by broad product category.

Suggested Citation

  • Lars Nilsson & Stephan Nolte, 2023. "The economic impact of the US-China trade dispute," International Economics and Economic Policy, Springer, vol. 20(4), pages 709-728, October.
    • Handle: RePEc:kap:iecepo:v:20:y:2023:i:4:d:10.1007_s10368-023-00574-9
    DOI: 10.1007/s10368-023-00574-9
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10368-023-00574-9
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10368-023-00574-9?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Angel Aguiar & Badri Narayanan & Robert McDougall, 2016. "An Overview of the GTAP 9 Data Base," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 1(1), pages 181-208, June.
    2. Kyle Handley & Nuno Limão, 2018. "Policy Uncertainty, Trade, and Welfare: Theory and Evidence for China and the United States," World Scientific Book Chapters, in: Policy Externalities and International Trade Agreements, chapter 5, pages 123-175, World Scientific Publishing Co. Pte. Ltd..
    3. Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-959, December.
    4. Sherman Robinson & Karen Thierfelder, 2019. "US-China Trade War: Both Countries Lose, World Markets Adjust, Others Gain," Policy Briefs PB19-17, Peterson Institute for International Economics.
    5. Lars Nilsson, 2018. "Reflections on the Economic Modelling of Free Trade Agreements," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 3(1), pages 156-186, June.
    6. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    7. Yvan Decreux & Hugo Valin, 2007. "MIRAGE, Updated Version of the Model for Trade Policy Analysis: Focus on Agriculture and Dynamics," Working Papers 2007-15, CEPII research center.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Abdul Hadi Sultani & U. Faisal, 2024. "Exploring the dynamics of the balance of payments problems: the case of Afghanistan," International Economics and Economic Policy, Springer, vol. 21(3), pages 569-592, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Esposito, Federico, 2022. "Demand risk and diversification through international trade," Journal of International Economics, Elsevier, vol. 135(C).
    2. Holger Breinlich & Elsa Leromain & Dennis Novy & Thomas Sampson, 2021. "Import liberalization as export destruction? Evidence from the United States," CEP Discussion Papers dp1779, Centre for Economic Performance, LSE.
    3. Dominick Bartelme & Andrei Levchenko & Ting Lan, 2019. "Specialization, Market Access and Medium-Term Growth," 2019 Meeting Papers 999, Society for Economic Dynamics.
    4. Naegele, Helene & Zaklan, Aleksandar, 2019. "Does the EU ETS cause carbon leakage in European manufacturing?," Journal of Environmental Economics and Management, Elsevier, vol. 93(C), pages 125-147.
    5. Fetzer, Thiemo & Lambert, Peter John & Feld, Bennet & Garg, Prashant, 2024. "AI-Generated Production Networks: Measurement and Applications to Global Trade," CAGE Online Working Paper Series 733, Competitive Advantage in the Global Economy (CAGE).
    6. Antoine Gervais, 2021. "Global sourcing under uncertainty," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(3), pages 1103-1135, November.
    7. Nilsson, Lars, 2019. "Reflections on the economic modelling of free trade agreements," DG TRADE Chief Economist Notes 2019-2, Directorate General for Trade, European Commission.
    8. Chae‐Deug Yi, 2023. "The economic and trade effects of the UK–Korea free trade agreement on the United Kingdom, Korea, Japan, China, and the European Union," Bulletin of Economic Research, Wiley Blackwell, vol. 75(2), pages 227-253, April.
    9. Jung, Benjamin, 2022. "The Trade Effects of the EU-South Korea Free Trade Agreement: Heterogeneity across Time, Country Pairs, and Directions of Trade within Country Pairs," VfS Annual Conference 2022 (Basel): Big Data in Economics 264125, Verein für Socialpolitik / German Economic Association.
    10. Michael Funke & Adrian Wende, 2023. "The US–China Phase One trade deal: An economic analysis of the managed trade agreement," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 56(2), pages 758-786, May.
    11. Esposito, Federico, 2019. "Demand Risk and Diversification through Trade," MPRA Paper 99875, University Library of Munich, Germany.
    12. Yi, Chae-Deug, 2020. "The computable general equilibrium analysis of the reduction in tariffs and non-tariff measures within the Korea-Japan-European Union free trade agreement," Japan and the World Economy, Elsevier, vol. 56(C).
    13. Benjamin Jung, 2023. "The Trade Effects of the EU-South Korea Free Trade Agreement: Heterogeneity Across Time, Country Pairs, and Directions of Trade within Country Pairs," Open Economies Review, Springer, vol. 34(3), pages 617-656, July.
    14. Latorre, María C. & Olekseyuk, Zoryana & Yonezawa, Hidemichi & Robinson, Sherman, 2020. "Making sense of Brexit losses: An in-depth review of macroeconomic studies," Economic Modelling, Elsevier, vol. 89(C), pages 72-87.
    15. Fontagné, Lionel & Foure, Jean, 2017. "General Equilibrium in the Long Run: a Tentative Quantification of the SSP scenarios," Conference papers 332833, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    16. Niemi, Janne, 2019. "Trade, persistent habits and development - a dynamic CGE model analysis," Conference papers 333084, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    17. Jafari, Yaghoob & Britz, Wolfgang, 2018. "Modelling heterogeneous firms and non-tariff measures in free trade agreements using Computable General Equilibrium," Economic Modelling, Elsevier, vol. 73(C), pages 279-294.
    18. Chen, Natalie & Juvenal, Luciana, 2022. "Markups, quality, and trade costs," Journal of International Economics, Elsevier, vol. 137(C).
    19. Tovar, Jorge, 2012. "Consumers’ Welfare and Trade Liberalization: Evidence from the Car Industry in Colombia," World Development, Elsevier, vol. 40(4), pages 808-820.
    20. Corsetti, Giancarlo & Martin, Philippe & Pesenti, Paolo, 2007. "Productivity, terms of trade and the `home market effect'," Journal of International Economics, Elsevier, vol. 73(1), pages 99-127, September.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:iecepo:v:20:y:2023:i:4:d:10.1007_s10368-023-00574-9. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.