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

Alim Rosyadi, Saiful and Widodo, Tri (2017): Impacts of Donald Trump’s Tariff Increase against China on Global Economy: Global Trade Analysis Project (GTAP) Model.

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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.

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