The Impact of The United States-China Trade War on The Rest of World Economy

Zhia Zhia Yulia Intan Pratama ,Yunastiti Purwaningsih ,Guntur Riyanto

doi:10.7176/jesd/12-12-12

Abstract

This study discusses the impact of the trade war between China and the United States due to the heating up of relations between the two countries and its impact on the Rest of the World (ROW), which will be seen based on economic performance through GDP, import exports, and employment. Using GTAP software by performing two simulations, the results of simulation 1 value of Real GDP of Rest of World decreased. The highest labor absorption was in the TextWapp sector, with the highest exports in the LightMnfc sector, in simulation 2 the value of Real GDP of Rest of the World increased, absorption the highest workforce in the TransComm sector, with the highest exports in the TransComm sector. The trade war between the United States and China affects the world economy globally, as evidenced by changes in the increase and decrease in GDP, employment and commodity exports in the rest of the world. Keywords: trade war, economy impact, GTAP analysis, rest of world, policy DOI: 10.7176/JESD/12-12-12 Publication date: June 30 th 2021

Highlights

In the current era of globalization, trading activities are considered very important to advance the welfare of mankind, from the existence of a trade, people will get convenience in obtaining goods and services (Hutabarat, 2016)
Is table 3.4: Table 3.4 is the result of GTAP output for exports of all commodities to all countries (Rest Of World) after carrying out the scenario in the 2nd shock, China increased tariffs by 25% for motorcycles made in the United States, motorcycles entered the TransComm sector After China raised tariffs 25% for motorcycles made in the United States, the export value of rest of the world has decreased in several sectors, namely GrainsCrops -0.004411, MeatLstk -0.001621, ProcFood -0.002631, TextWapp -0.060456, LightMnfc - 0.013470, HeavyMnfc -0.017063, and Util_cons -0.005067
Real GDP for Rest of World experienced an increase in Real GDP value by 0.000031, the United States experienced a decrease in Real GDP value by -0.001329, while China benefited the most, with an increase in Real GDP by 0.000169

Summary

Introduction

In the current era of globalization, trading activities are considered very important to advance the welfare of mankind, from the existence of a trade, people will get convenience in obtaining goods and services (Hutabarat, 2016) Every trade policy, both out and into the country, has the same orientation, namely to increase the income of countries around the world. The policy serves to protect US producers and is a critical form of national security (Barratul, 2020) In this case, the United States president Donald Trump took a policy that triggered a war in the world of international trade between the United States and China with his policy of increasing steel import tariffs by 25% (BBC, 2018). This research will start with introduction, methodology, results and discussion

Methodology

CHN China

Findings

Result and Discussion

Conclusion