Different degrees of losers: the effects of the 2018 U.S.-China trade war
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School of Business |
Bachelor's thesis
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Authors
Date
2020
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Mcode
Degree programme
Taloustiede
Language
en
Pages
22
Series
Abstract
In 2018 the United States and China engaged in a trade war by taking turns in increasing their import tariffs against one another. This literature review examines the domestic and global effects of the trade war. The focus is on welfare analysis from consumers, producers and governments perspective. Global effects are included in order to gain a broad vision on the effects of protection. In a global economy, it is hard to find winners in a trade war. Domestic consumers lose, notably because prices of imports increase. Producers in some sectors gain due to increased domestic de-mand. Other producers may lose if retaliatory tariffs targeted their products. Tariffs increase gov-ernments revenue resulting in a positive effect. The aggregate domestic welfare effect is estimated to be negative. At the global level some countries can benefit from the trade war as their products become more competitive in comparison. However, these gains are offset by increased uncertainty which leads to decreased investments and output across all regions.Description
Thesis advisor
Mustonen, MikkoMurto, Pauli
Keywords
trade protection, international trade, welfare analysis, trade war