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Trade War and Trade Policy Uncertainty in a Global Macro Model

Author

Listed:
  • Jetro Anttonen

    (Monetary Policy and Research Department Bank of Finland)

  • Pasi Ikonen

    (Monetary Policy and Research Department Bank of Finland)

  • Sanna Kurronen

    (Monetary Policy and Research Department Bank of Finland)

  • Markku Lehmus

    (Monetary Policy and Research Department Bank of Finland)

  • Risto Rönkkö

    (Monetary Policy and Research Department Bank of Finland)

  • Lauri Vilmi

    (Monetary Policy and Research Department Bank of Finland)

Abstract

Import tariff announcements by the United States and the ensuing trade war have generated both academic and political interest in their global economic consequences. In this paper, we use a global macroeconomic model to analyze the global economic effects of the trade war under a particular scenario. In addition to the direct effects of the import tariffs, we also account for the indirect economic effects of the increased trade policy uncertainty. We find that a trade war triggered by U.S.-initiated import tariffs could decrease global output by approximately 0.5 percent. However, the negative economic effects seem larger for the euro area and are even more pronounced for China. In contrast, the global effects on inflation are estimated to be relatively modest.

Suggested Citation

  • Jetro Anttonen & Pasi Ikonen & Sanna Kurronen & Markku Lehmus & Risto Rönkkö & Lauri Vilmi, 2026. "Trade War and Trade Policy Uncertainty in a Global Macro Model," Asian Economic Papers, MIT Press, vol. 25(2), pages 55-68, Summer.
    • Handle: RePEc:tpr:asiaec:v:25:y:2026:i:2:p:55-68
    DOI: 10.1162/ASEP.a.985
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