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Economic impacts of the US-China trade war on the asian economy : an applied analysis of IDE-GSM

Author

Listed:
  • Kumagai, Satoru
  • Gokan, Toshitaka
  • Tsubota, Kenmei
  • Isono, Ikumo
  • Hayakawa, Kazunobu

Abstract

In this paper, we try to estimate the economic impacts of the US–China trade war that began in 2018. We used IDE-GSM, a computational general equilibrium simulation model, to estimate the economic impacts of a “full-confrontation” scenario wherein both countries impose 25% additional tariffs on all goods imported from each other for three years 2019 onwards. In our calculation, the economic impact for the US is -0.4% and -0.6% for China. Some Asian countries actually benefit from the trade war. As far as it remains bilateral, the trade war is only an issue for the concerned parties. We also ran the US–world trade war scenario, wherein the US and all other countries impose a 25% additional tariff on all goods. The negative impact on the global economy is 1.7%, much greater than the 0.1% impact from the US–China trade war. Thus, it is clear that the world cannot afford to engage in a multilateral trade war.

Suggested Citation

  • Kumagai, Satoru & Gokan, Toshitaka & Tsubota, Kenmei & Isono, Ikumo & Hayakawa, Kazunobu, 2019. "Economic impacts of the US-China trade war on the asian economy : an applied analysis of IDE-GSM," IDE Discussion Papers 760, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    • Handle: RePEc:jet:dpaper:dpaper760
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    Citations

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    Cited by:

    1. Ignatia Martha Hendrati & Unggul Heriqbaldi & Miguel Angel Esquivias & Bekti Setyorani & Ari Dwi Jayanti, 2023. "Propagation of Economic Shocks from the United States, China, the European Union, and Japan to Selected Asian Economies: Does the Global Value Chain Matters?," International Journal of Energy Economics and Policy, Econjournals, vol. 13(1), pages 91-102, January.

    More about this item

    Keywords

    US-China trade war; IDE-GS; Trade problem;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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