The US-China Trade Dispute: A Macro Perspective

39 Pages Posted: 5 Feb 2019

See all articles by Rod Tyers

Rod Tyers

Australian National University (ANU) - School of Economics; The University of Western Australia - Department of Economics

Yixiao Zhou

Curtin University

Date Written: January 2019

Abstract

The recent rise of populism and authoritarian politics has seen a turn from multilateralism and toward international disputes like that between the US and China. This paper uses a calibrated global macro model to assess the potential economic consequences of this conflict under explicit assumptions about monetary and fiscal policy. US unilateral protection emerges as “beggar thy neighbor” policy, the more so if new tariff revenue affords capital tax relief. China’s proportional losses are comparatively large and little mitigated by retaliation, which nonetheless constrains US net gains. Avoiding leakage by protecting against all sources causes substantial losses in third regions trading with China and the US.

Keywords: trade disputes, China, macroeconomic policy, general equilibrium analysis, numerical theory

JEL Classification: F13, F41, F47

Suggested Citation

Tyers, Rod and Zhou, Yixiao, The US-China Trade Dispute: A Macro Perspective (January 2019). CAMA Working Paper No. 11/2019. Available at SSRN: https://ssrn.com/abstract=3328294 or http://dx.doi.org/10.2139/ssrn.3328294

Rod Tyers (Contact Author)

Australian National University (ANU) - School of Economics ( email )

Arndt Building
Australian National University
Canberra, Australian Capital Territory 0200
Australia
61-6-249-5124 (Fax)

The University of Western Australia - Department of Economics ( email )

35 Stirling Highway
Crawley, Western Australia 6009
Australia
61 8 6488 5632 (Phone)

HOME PAGE: http://www.business.uwa.edu.au/school/staff-profiles?type=profile&dn=cn%3DRodney%20Tyers%2Cou%3DEcon

Yixiao Zhou

Curtin University ( email )

Kent Street
Bentley
Perth, WA WA 6102
Australia

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