Trade wars and industrial policy competitions: Understanding the US-China economic conflicts

• 成果类型: Article
• 署名作者: Ju, Jiandong; Ma, Hong; Wang, Zi; Zhu, Xiaodong
• 署名单位: Tsinghua University; Hong Kong Baptist University; University of Hong Kong
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2023.10.012
• 发表日期: 2024
• 页码: 42-58
• 关键词: Trade war; Industrial policy; Scale economies; strategic interactions

摘要

We provide the first quantitative evaluation of the impacts and interactions of the US-China trade wars and industrial policy competitions. We extend the model in Caliendo and Parro (2015) by incorporating sectoral external economies of scale. We find that (i) under our baseline calibration of scale economies, the Made-in-China 2025(MIC 2025) subsidies tend to improve the welfare of both China and the U.S.; (ii) the US gains from Trumpian tariffs if China does not retaliate, and the gain is larger if China had implemented the MIC 2025project; (iii) in a non-cooperative tariff game targeting on high-tech industries supported by the MIC 2025, both China and the U.S. impose high tariffs and endure welfare losses; and (iv) if it is feasible for the U.S. to subsidize its own high-tech industries, the U.S. would reduce its tariffs on high-tech imports from China and benefit from its own industrial subsidies. These results (i) provide a rationale for trade wars and industrial policy competitions between the U.S. and China and (ii) suggest that industrial subsidies, if properly implemented, may generate less distortion than import tariffs as a means of international competition.