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The US trade dispute: blunt offense or rational strategy?

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  • Michael Hübler
  • Axel Herdecke

Abstract

This article evaluates the recent protectionist US trade policy and the retaliation of the EU and China. The article employs a New Quantitative Trade Theory model and an Armington model for comparison. The simulation results show that US car tariffs are a credible threat to the EU, but the steel and aluminum tariffs are not. China suffers considerably from the US tariffs, especially the latest extended, tightened tariffs. The retaliation measures of the EU and China, however, do not cause significant US welfare losses compared to the situation without mutual trade policy.

Suggested Citation

  • Michael Hübler & Axel Herdecke, 2020. "The US trade dispute: blunt offense or rational strategy?," Applied Economics Letters, Taylor & Francis Journals, vol. 27(9), pages 690-696, May.
    • Handle: RePEc:taf:apeclt:v:27:y:2020:i:9:p:690-696
    DOI: 10.1080/13504851.2019.1644428
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    References listed on IDEAS

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    1. Hübler, Michael & Löschel, Andreas, 2013. "The EU Decarbonisation Roadmap 2050—What way to walk?," Energy Policy, Elsevier, vol. 55(C), pages 190-207.
    2. Jonathan Eaton & Samuel Kortum, 2002. "Technology, Geography, and Trade," Econometrica, Econometric Society, vol. 70(5), pages 1741-1779, September.
    3. Pothen, Frank & Hübler, Michael, 2018. "The interaction of climate and trade policy," European Economic Review, Elsevier, vol. 107(C), pages 1-26.
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    Cited by:

    1. Deniz Sevinç & Alp Polat & Tuba Sevil & Güven Sevil, 2023. "How Does Deglobalization Affect Economic Growth?," Journal of Research in Economics, Politics & Finance, Ersan ERSOY, vol. 8(1), pages 1-19.
    2. Métivier, Jeanne & Bacchetta, Marc & Bekkers, Eddy & Koopman, Robert, 2023. "International trade cooperation’s impact on the world economy," Journal of Policy Modeling, Elsevier, vol. 45(4), pages 713-744.
    3. Tai‐Liang Chen & Ying Kuang, 2023. "Endogenous timing, strategic tariff game and bilateral trade in vertical oligopoly," Pacific Economic Review, Wiley Blackwell, vol. 28(1), pages 74-96, February.
    4. Métivier, Jeanne & Bacchetta, Marc & Bekkers, Eddy & Koopman, Robert Bernard, 2023. "International trade cooperation's impact on the world economy," WTO Staff Working Papers ERSD-2023-02, World Trade Organization (WTO), Economic Research and Statistics Division.
    5. Haiou Mao & Ling Xiong, 2022. "Is Bilateral Value Added in Trade between China and EU Countries Efficient?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 30(3), pages 210-238, May.

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    More about this item

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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