Environmental and economic impacts of trade barriers: The example of China–US trade friction

Li Jing Liu, Felix Creutzig, Yun Fei Yao, Yi Ming Wei, Qiao Mei Liang*

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    61 Citations (Scopus)

    Abstract

    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.

    Original languageEnglish
    Article number101144
    JournalResource and Energy Economics
    Volume59
    DOIs
    Publication statusPublished - Feb 2020

    Keywords

    • Climate change
    • Greenhouse gases
    • Pollutant emissions
    • Tariff increase
    • Trade barrier

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