IDEAS home Printed from https://ideas.repec.org/p/zbw/ifwkpb/317795.html

The consequences of the Trump trade war for Europe

Author

Listed:
  • 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 Briefs 190, Kiel Institute for the World Economy.
    • Handle: RePEc:zbw:ifwkpb:317795
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/317795/1/1925845354.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    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.
    2. Boysen-Hogrefe, Jens & Groll, Dominik & Hoffmann, Timo & Jannsen, Nils & Kooths, Stefan & Krohn, Johanna & Reents, Jan & Schröder, Christian, 2025. "Deutsche Wirtschaft im Herbst 2025: Konjunktur noch ohne Schwung [German Economy in Autumn 2025: Economy yet to gain momentum]," Kieler Konjunkturberichte 127, Kiel Institute for the World Economy.
    3. 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.
    4. Martin Schneider & Richard Sellner, 2025. "The impact of US tariffs on EU industries: results from a global input-output model (OeNB Bulletin Q3/25)," OeNB Bulletin, Oesterreichische Nationalbank (Austrian Central Bank), issue Q3/25-2, pages 1-26.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yuko Imura, 2023. "Reassessing Trade Barriers with Global Production Networks," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 51, pages 77-116, December.
    2. Miaojie Yu, 2020. "China-US Trade War and Trade Talk," Springer Books, Springer, number 978-981-15-3785-1, January.
    3. Martin T. Braml & Marina Steininger, 2020. "Giving Away Wealth? Trade Effects of the Yuan Devaluation," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 20(04), pages 32-35, January.
    4. Jesús Fernández-Villaverde & Tomohide Mineyama & Dongho Song, 2026. "How Globalization Unravels: A Ricardian Model of Endogenous Trade Policy," NBER Working Papers 34672, National Bureau of Economic Research, Inc.
    5. Bolatto, Stefano & Moramarco, Graziano, 2023. "Gains from trade and their quantification: Does sectoral disaggregation matter?," International Economics, Elsevier, vol. 174(C), pages 44-68.
    6. Asjad Naqvi, 2026. "Evaluating Tariff Shock Propagation in an Integrated Demand System-MRIO Framework," WIFO Working Papers 723, WIFO.
    7. Holger Breinlich & Elsa Leromain & Dennis Novy & Thomas Sampson, 2026. "Import Liberalization as Export Destruction? Evidence from the United States," American Economic Journal: Macroeconomics, American Economic Association, vol. 18(3), pages 77-111, July.
    8. Swati Dhingra & Thomas Sampson, 2022. "Expecting Brexit," Annual Review of Economics, Annual Reviews, vol. 14(1), pages 495-519, August.
    9. Ossa, Ralph & Redding, Stephen, 2026. "The Economics of Tariffs," CEPR Discussion Papers 21221, Centre for Economic Policy Research.
    10. Berthou, Antoine & Mayer, Thierry & Mésonnier, Jean-Stéphane, 2024. "Good connections : Bank specialization and the tariff elasticity of exports," Journal of International Economics, Elsevier, vol. 152(C).
    11. Cappariello, Rita & Franco-Bedoya, Sebastian & Gunnella, Vanessa & Ottaviano, Gianmarco I. P., 2020. "Rising protectionism and global value chains: quantifying the general equilibrium effects," LSE Research Online Documents on Economics 108423, London School of Economics and Political Science, LSE Library.
    12. Fontagné, Lionel & Guimbard, Houssein & Orefice, Gianluca, 2022. "Tariff-based product-level trade elasticities," Journal of International Economics, Elsevier, vol. 137(C).
    13. Klotz, Richard & Sharma, Rishi R., 2023. "Trade barriers and CO2," Journal of International Economics, Elsevier, vol. 141(C).
    14. Bartelme, Dominick & Lan, Ting & Levchenko, Andrei A., 2024. "Specialization, market access and real income," Journal of International Economics, Elsevier, vol. 150(C).
    15. Pau S. Pujolas & Jack Rossbach, 2026. "Fiscal Limits to Protectionism: The 2025 U.S.Tariff Laffer Curve," Department of Economics Working Papers 2026-01, McMaster University.
    16. Swati Dhingra & Rebecca Freeman & Hanwei Huang, 2023. "The Impact of Non‐tariff Barriers on Trade and Welfare," Economica, London School of Economics and Political Science, vol. 90(357), pages 140-177, January.
    17. Charles Serfaty & Sebastian Stumpner, 2026. "Geoeconomic Fragmentation in a Multi-Country GVC Model," Working papers 1030, Banque de France.
    18. repec:cam:camjip:2408 is not listed on IDEAS
    19. Cecilia Bellora & Lionel Fontagné, 2019. "Shooting Oneself in the Foot? Trade War and Global Value Chains," Working Papers 2019-18, CEPII research center.
    20. Ju, Jiandong & Ma, Hong & Wang, Zi & Zhu, Xiaodong, 2024. "Trade wars and industrial policy competitions: Understanding the US-China economic conflicts," Journal of Monetary Economics, Elsevier, vol. 141(C), pages 42-58.
    21. Caliendo, Lorenzo & Feenstra, Robert C. & Romalis, John & Taylor, Alan M., 2023. "A second-best argument for low optimal tariffs on intermediate inputs," Journal of International Economics, Elsevier, vol. 145(C).

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:ifwkpb:317795. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/iwkiede.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.