The impact on the US
Fajgelbaum and al. analyze the impact of the 2018 trade war on the U.S. economy:
- They estimate an annual loss for the U.S. of $68.8 billion due to higher import prices;
- Using a general equilibrium framework and the estimated elasticities, they compute gains of $21.6 billion from higher prices received by US producers;
- The redistribution from buyers of foreign goods to U.S. producers and the government nets out to a negative effect of $7.8 billion on an annual basis for the U.S. economy (0.04% of GDP) and;
- In the absence of retaliations, the aggregate loss would have been one third of that value.
The Return to Protectionism
Authors: Pablo D. Fajgelbaum, Pinelopi K. Goldberg, Patrick J. Kennedy, Amit K. Khandelwal
From: UCLA, Yale, UC Berkeley, Columbia University
The impact on Europe
Francesca Viani finds that the US tariffs on Chinese products have had only a marginal impact on EU trade and European economies. But she warns that US tariffs on vehicle imports could have a significant adverse effect on the European Union as a whole, where the industry’s value added would shrink by 3%. For Austria, Germany and Hungary the negative effect on the automotive sector’s value added will be more severe and estimated at 6.9%, 4.7% and 4.5% respectively.
The Latest Protectionist Trade Trends and their Impact on the European Union
Authors: Francesca Viani
From: Banco de España
