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

Author

Listed:
  • 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
    as

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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. Dong, Yan & Whalley, John, 2012. "Gains and losses from potential bilateral US–China trade retaliation," Economic Modelling, Elsevier, vol. 29(6), pages 2226-2236.
    2. Burfisher,Mary E., 2011. "Introduction to Computable General Equilibrium Models," Cambridge Books, Cambridge University Press, number 9780521766968, December.
    3. Bown, Chad P. & Crowley, Meredith A., 2007. "Trade deflection and trade depression," Journal of International Economics, Elsevier, vol. 72(1), pages 176-201, May.
    4. Chandra, Piyush, 2016. "Impact of temporary trade barriers: Evidence from China," China Economic Review, Elsevier, vol. 38(C), pages 24-48.
    5. 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.
    6. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685.
    7. Mahadevan, Renuka & Nugroho, Anda & Amir, Hidayat, 2017. "Do inward looking trade policies affect poverty and income inequality? Evidence from Indonesia's recent wave of rising protectionism," Economic Modelling, Elsevier, vol. 62(C), pages 23-34.
    8. Hanoch, Giora, 1975. "Production and Demand Models with Direct or Indirect Implicit Additivity," Econometrica, Econometric Society, vol. 43(3), pages 395-419, May.
    9. Burfisher,Mary E., 2011. "Introduction to Computable General Equilibrium Models," Cambridge Books, Cambridge University Press, number 9780521139779, December.
    10. Rieber, William J, 1981. "Tariffs as a Means of Altering Trade Patterns," American Economic Review, American Economic Association, vol. 71(5), pages 1098-1099, December.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Donald Trump; Tariff Increase; GTAP Model;

    JEL classification:

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

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