Environmental and Economic Impacts of Trade Barriers: The Example of China–US Trade Friction

The new age of trade wars could simultaneously affect the worldwide distribution pattern of the economy and environmental emissions. However, previous studies have focused on economic impacts, and on trade liberalization, while little is known about the equilibrium effects of trade barriers on the environment. Using a global computable general equilibrium model and taking the recent anti-trade policies of the Trump administration as an example, this study investigates the possible socio-economic and environmental effects of trade friction. Specifically, this study explores how the implemented six rounds of China–US trade friction and its different long-term development trends affect regional economic output, GHG and air pollutant emissions. Results show that trade barriers harm both countries’ economies and such losses have a certain permanence, while non-participants can benefit indirectly. Trade friction decreases participants’ GHG emissions, modifies global GHG emission distribution patterns, and leads to improved air quality in most countries. If governments continue to impose tariffs, global GHG emissions could counterfactually decrease by up to 5%. However, the change in trade patterns is not conducive to clean energy development in the less-developed regions, including the Middle East, Africa, and Latin America, and emission reductions from trade friction are insufficient to avoid catastrophic climate change

Licence Information:

© 2019 Elsevier B.V. All rights reserved.

Liu, L-J.; Creutzig, F.; Yao, Y-F.; Wei, Y-M. and Liang, Q-M. (2020) 'Environmental and Economic Impacts of Trade Barriers: The Example of China–US Trade Friction', Resource and Energy Economics 59.101144

Subscribe to CGDKN

Stay informed with our regular email updates.