According to a simulation study conducted by the European Central Bank (ECB) on Wednesday, the US would suffer the most economically if it starts a global trade war while China would emerge better-off, despite retaliation, Reuters reports.
Key Findings:
‘The ECB study simulates a 10 percent U.S. tariff on all imports and an equivalent retaliation from other countries.
Estimation results suggest that the United States’ net export position would deteriorate substantially.
In this model, U.S. firms also invest less and hire fewer workers, which amplifies the negative effect.
The ECB estimates U.S. growth would be cut by more than 2 percentage points.
By contrast, China would gain by exporting more to third countries where U.S. goods are subject to tariffs, although that slight gain would be temporary and partly offset by a negative effect on confidence.”
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