US-China Tariff War: A Gravity Approach

Abstract

Trade wars occur as a consequence of countries imposing tariffs and/or other trade barriers on one another. Such phenomenon is often a result of nationalism, unilateralism, and protectionism, and intensifies due to retaliation by different sides of the war. We use recent multinational trade data to measure the effects of single- and multi-sided tariffs on international trade. The methodology used in the paper is the structural Gravity model first introduced by Anderson and van Wincoop (2003). Theoretical implications and references of gravity equations are also presented throughout the article.