Impacts of China-US trade conflicts on the energy sector

Abstract

This paper uses a multi-country input-output model to simulate the impacts of the recent China-U.S. trade war. We first examine in detail the list of products subject to additional tariffs, and then use the model to estimate the economic impacts of the trade conflict. Based on the direct and indirect impacts on the energy sector of each country, we then extend the analysis to the issue of global energy demand. Our empirical results indicate that both China and the U.S. suffer from the conflict, although the impacts on China are greater Both countries experience a reduction in energy demand and a general economic slowdown. Although certain countries may benefit from the China-U.S. trade conflict in short-run, a general negative impact on the global economic prospects can affect all. Moreover, a short-term marginal impact on the global energy market is found, but as the consequence of long-term uncertainties and indirect economic impacts, further reductions of global energy demand are expected.