All would claim the goal was to shore up domestic producers and protect jobs. But according to our calculations, US exports would shrink by almost 15% and Europe’s by nearly 13% while China would import a little over 11% less. Global GDP would contract by almost 1.5%. And this doesn’t take into account the negative effects that would be unleashed by almost-certain retaliatory actions by other countries. There would also undoubtedly be investment slowdowns and disrupted global supply chains that fuel production of everything from your phone to your car. When trade costs go up, everyone loses.
Reference
OECD (2018), OECD Economic Outlook, Volume 2018 Issue 1: Preliminary version, OECD Publishing, Paris, http://dx.doi.org/10.1787/eco_outlook-v2018-1-en.
©OECD Observer June 2018