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Evaluating the Impact of the US–China Trade War on Euro Area Economies: A Tale of Global Value Chains

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  • Ilaria Fusacchia

    (Roma Tre University)

Abstract

The US–Sino trade war will have significant repercussions on the global trade system. This study assesses the implications of the successive rounds of tariff hikes implemented by the US and Chinese governments on global value chains, with a focus on the major European Union economies. The evaluation is based on a computable general equilibrium model which incorporates a decomposition of trade in a value-added basis and allows to identify how changes in the conditions under which US–China trade is conducted affect the value contributed by different countries and to what extent. I find that US integration within GVCs contracts whereas China increases its participation mainly as a seller to global networks. The EU countries strengthen their linkages with the US and EU regional integration increases as a consequence of the tariff war between the US and China.

Suggested Citation

  • Ilaria Fusacchia, 2020. "Evaluating the Impact of the US–China Trade War on Euro Area Economies: A Tale of Global Value Chains," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 6(3), pages 441-468, November.
    • Handle: RePEc:spr:italej:v:6:y:2020:i:3:d:10.1007_s40797-019-00109-9
    DOI: 10.1007/s40797-019-00109-9
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    2. Chih‐Hai Yang & Kazunobu Hayakawa, 2023. "The Substitution Effect of US‐China Trade War on Taiwanese Trade," The Developing Economies, Institute of Developing Economies, vol. 61(4), pages 324-341, December.

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    More about this item

    Keywords

    Trade war; Global value chains; Trade in value added; Computable general equilibrium model; Trade policy;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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