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The consequences of the Trump trade war for Europe

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  • Hinz, Julian
  • Méjean, Isabelle
  • Schularick, Moritz

Abstract

- Using the KITE model suite, we study the economic costs of the Trump tariff policy for Europe, and analyze the potential for trade diversion from China. - If the current tariff regime stays in place, trade between the U.S. and China would fall dramatically, hurting mainly the U.S. and the Chinese economies. The direct economic impact for Europe appears limited. - The expected rerouting of Chinese and U.S. exports to third countries is likely to intensify competition between European and Chinese producers in key markets. European consumers stand to benefit from lower prices.

Suggested Citation

  • Hinz, Julian & Méjean, Isabelle & Schularick, Moritz, 2025. "The consequences of the Trump trade war for Europe," Kiel Policy Brief 190, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkpb:317795
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    References listed on IDEAS

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    1. Pablo D Fajgelbaum & Pinelopi K Goldberg & Patrick J Kennedy & Amit K Khandelwal, 2020. "The Return to Protectionism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(1), pages 1-55.
    2. Lorenzo Caliendo & Fernando Parro, 2015. "Estimates of the Trade and Welfare Effects of NAFTA," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 82(1), pages 1-44.
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    Cited by:

    1. Boysen-Hogrefe, Jens & Groll, Dominik & Hoffmann, Timo & Jannsen, Nils & Kooths, Stefan & Schröder, Christian, 2025. "Deutsche Wirtschaft im Sommer 2025: Talsohle erreicht, Erholungssignale verdichten sich [German Economy in Summer 2025: Signs of recovery as economy bottoms out]," Kieler Konjunkturberichte 125, Kiel Institute for the World Economy (IfW Kiel).
    2. Boysen-Hogrefe, Jens & Groll, Dominik & Hoffmann, Timo & Jannsen, Nils & Kooths, Stefan & Schröder, Christian, 2025. "German Economy in Summer 2025: Signs of recovery as economy bottoms out," Kiel Institute Economic Outlook 125, Kiel Institute for the World Economy (IfW Kiel).

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