We use an advanced global economic model to consider a set of scenarios associated with a proposal to impose a flat 60% tariff on Chinese imports and a flat 10% tariff on all other US imports. The formulation of the model, which involves imperfect competition in profitable growing industries, is documented in Balistreri, Böhringer, and Rutherford (2024). The basis for the tax rates is a proposal from former President Donald Trump (see Wolff 2024). We process these cases on a case-by-case basis with and without our trading partners. Our key 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 more than $910 billion in effective global losses of $360 billion. So, on net, America’s trade partners get $550 billion. Canada is the only country to lose out in the US trade war because of its close relationship with the United States.
Wow! That comes from Edward J. Balistreri and Christine McDaniel, in their latest study.
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