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Impacts of Donald Trump’s Tariff Increase against China on Global Economy: Global Trade Analysis Project (GTAP) Model

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  • Alim Rosyadi, Saiful
  • Widodo, Tri

Abstract

This paper aims to analyze the possible impacts of the US import tariff against China on global economy. The GTAP model is implemented. The simulation scenarios depicted short-run effects of full-protection and manufacturing protection with appropriate retaliation response from China. On global level, the policy was projected to lead to decline in GDP, terms-of-trade, and welfare; and increase in trade balance for United States and China. Trade diversion phenomena would occur, predicting steep decline in bilateral trade between the two countries and increasing export towards their third trading partners.

Suggested Citation

  • Alim Rosyadi, Saiful & Widodo, Tri, 2017. "Impacts of Donald Trump’s Tariff Increase against China on Global Economy: Global Trade Analysis Project (GTAP) Model," MPRA Paper 79493, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:79493
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    File URL: https://mpra.ub.uni-muenchen.de/79493/1/MPRA_paper_79493.pdf
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    References listed on IDEAS

    as
    1. Burfisher,Mary E., 2011. "Introduction to Computable General Equilibrium Models," Cambridge Books, Cambridge University Press, number 9780521766968, December.
    2. Bown, Chad P. & Crowley, Meredith A., 2007. "Trade deflection and trade depression," Journal of International Economics, Elsevier, vol. 72(1), pages 176-201, May.
    3. Dong, Yan & Whalley, John, 2012. "Gains and losses from potential bilateral US–China trade retaliation," Economic Modelling, Elsevier, vol. 29(6), pages 2226-2236.
    4. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685, December.
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    6. Chandra, Piyush, 2016. "Impact of temporary trade barriers: Evidence from China," China Economic Review, Elsevier, vol. 38(C), pages 24-48.
    7. Adams, Philip D., 2005. "Interpretation of results from CGE models such as GTAP," Journal of Policy Modeling, Elsevier, vol. 27(8), pages 941-959, November.
    8. Hanoch, Giora, 1975. "Production and Demand Models with Direct or Indirect Implicit Additivity," Econometrica, Econometric Society, vol. 43(3), pages 395-419, May.
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    10. Nobuhiro Hosoe & Kenji Gasawa & Hideo Hashimoto, 2010. "Textbook of Computable General Equilibrium Modelling," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-28165-3.
    11. Burfisher,Mary E., 2011. "Introduction to Computable General Equilibrium Models," Cambridge Books, Cambridge University Press, number 9780521139779, December.
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    Cited by:

    1. Septiyas Trisilia, Mustika & Widodo, Tri, 2019. "Impacts of China Coal Import Tariff against US on Global Economy and CO2 Emissions," MPRA Paper 91231, University Library of Munich, Germany.
    2. Wang, Xiaojuan & Shi, Benye, 2022. "Transmission and Diffusion Effect of Sino-US Trade Friction along Global Value Chains," Finance Research Letters, Elsevier, vol. 46(PA).

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    More about this item

    Keywords

    Donald Trump; Tariff Increase; GTAP Model;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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