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Long-Run Effects on Chinese GDP from U.S.-China Tariff Hikes
Since the beginning of 2018, the United States and China have increased tariff rates on each other's imports, contributing to fears of a global downturn. In the near-to-medium term, there are several channels through which increased tariffs and continued uncertainty could affect global growth. First, higher tariffs are equivalent to a tax increase, with negative effects on consumption and investment. Second, given China's important role in global value chains, an increase in bilateral tariffs could disrupt supply chains, with significant negative effects on output. Third, increased uncertainty could dampen GDP if ... (full story)