Yeutter Institute of International Trade and Finance
Date of this Version
10-2-2024
Document Type
Article
Citation
Yeutter Institute International Trade Policy Review (October 2, 2024)
doi: 10.32873/10.32873/unl.dc.yiitpr.13
Abstract
We use an advanced model of the global economy to consider a set of scenarios consistent with the proposal to impose a minimum 60% tariff against Chinese imports and blanket minimum 10% tariff against all other US imports. The model’s structure, which includes imperfect competition in increasing-returns industries, is documented in Balistreri, Böhringer, and Rutherford (2024). The basis for the tariff rates is a proposal from former President Donald Trump (see Wolff 2024). We consider these scenarios with and without symmetric retaliation by our trade partners. Our central finding is that a global trade war between the United States and the rest of the world at these tariff rates would cost the US economy over $910 billion at a global efficiency loss of $360 billion. Thus, on net, US trade partners gain $550 billion. Canada is the only other country that loses from a US go-it-alone trade war because of its exceptionally close trade relationship with the United States.
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Agribusiness Commons, Economic Policy Commons, Finance Commons, International and Area Studies Commons, Regional Economics Commons
Comments
Copyright 2024, Yeutter Institute. Used by permission