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GTAP Resource #6399

"The impacts of the Sino-U.S. trade war on major cotton exporting and importing economies."
by Adhikari, Shweta

It has already been more than two years since the trade war started in 2018 and the major players China and the United States are still retaliating through restrictions and duties in multiple sectors. Since the onset of a trade war, both parties have imposed tariffs on billions of dollars worth of products and the agriculture sector has been a focal point of this tit-for-tat fight. Recognizing the impact of the trade war on these economies, the phase one trade deal was signed by two countries that further opened China’s market to American agricultural products. Cotton and textiles are the two important products that link the trade flow between both countries. China’s comparative advantages on the textile industry provided its labor abundance allows it to export its textile products to the rest of the world, including the U.S. The US is one of the largest cotton producers with comparative advantage of the land and capital stock. In July 2018, 25% tariffs on American cotton were imposed by China which increased the tariff for out-of-quota cotton to reach as high as 65%. Series of tariffs were imposed by the U.S. on Chinese textile with 15% tariffs implemented before the Phase One Trade Deal and reduced to 7.5% of tariff on the afterward. Only a few researches focused on the impacts of the trade dispute on cotton and textile industries particularly. Cotton itself has a large variety of products within its Harmonized System and the linkage with the textile industry makes it an even more complicated product to study. This study intends to understand the effects of the trade war on some of the major cotton trading countries and regions, including Brazil, US-China, Vietnam, and South Asia. We evaluate the impact of these tariffs on national GDP, employment, and market prices. The objective of our study is to highlight the potential economic consequences that the tariffs are creating in the global context.

Resource Details (Export Citation) GTAP Keywords
Category: 2021 Conference Paper
Status: Not published
By/In: Presented during the 24th Annual Conference on Global Economic Analysis (Virtual Conference)
Date: 2021
Created: Adhikari, S. (4/15/2021)
Updated: Adhikari, S. (6/24/2021)
Visits: 463
- Agricultural policies

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