2018-11 Trade Wars：Economic impacts of US tariff increases and retaliations:An International Perspective


Contents
Summary—5
1 Introduction—6
2 Methodology and design of the trade policy scenarios—8
2.1 WorldScan—8
2.2 Design of trade policy scenarios—9
2.2.1 Scenario 1: US unilateral steel and aluminium (S&A) tariffs—9
2.2.2 Scenario 2: Retaliation over US steel and aluminium tariffs—10
2.2.3 Scenario 3: US-China trade sanctions—14
2.2.4 Scenario 4: US tariffs on motor vehicles—15
2.2.5 Additional Scenarios: Trade war escalations—16
2.2.6 Summary of the trade policy scenarios—16
3 Results—17
3.1 Announced policies—18
3.2 Trade war escalation scenarios—25
3.3 Sensitivity analysis—26
3.3.1 Trade elasticity changes—26
3.3.2 WorldScan with different model specifications—28
3.4 Concluding remarks—30
Literature—33
Appendix 1: Technical specifications of the WorldScan CGE model—35
Economic model—35
Monopolistic competition—36
Endogenous labour supply—37
International trade—37
Underlying data and calibration—38
Appendix 2: Regional and Sectoral Aggregation—39
Appendix 3: Additional tables—41
Trade conflict—41
Trade war—41