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Trade war and peace: U.S.-China trade and tariff risk from 2015–2050

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Listed:
  • Alessandria, George
  • Khan, Shafaat Yar
  • Khederlarian, Armen
  • Ruhl, Kim J.
  • Steinberg, Joseph B.

Abstract

We model trade policy as a Markov process. Using a dynamic exporting model, we estimate how expectations about U.S. tariffs on China have changed around the U.S.-China trade war. We find (i) no increase in the likelihood of a trade war before 2018; (ii) the trade war was initially expected to end quickly but its expected duration grew substantially after 2020; and (iii) the trade war reduced the likelihood that China would face Non-Normal Trade Relations tariffs in the future. Our findings imply the expected mean future U.S. tariff on China rose more under President Biden than under President Trump.

Suggested Citation

  • Alessandria, George & Khan, Shafaat Yar & Khederlarian, Armen & Ruhl, Kim J. & Steinberg, Joseph B., 2025. "Trade war and peace: U.S.-China trade and tariff risk from 2015–2050," Journal of International Economics, Elsevier, vol. 155(C).
    • Handle: RePEc:eee:inecon:v:155:y:2025:i:c:s0022199625000224
    DOI: 10.1016/j.jinteco.2025.104066
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    More about this item

    Keywords

    Trade war; Trade liberalization; Trade-policy uncertainty (TPU); Trade dynamics; Trade elasticity;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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