Global and National Environmental Impacts of the US-China Trade War

The recent US-China trade war has aroused concern over trade-related environmental impacts. This study built a multiregional computable general equilibrium model to simulate environmental impacts of the US-China trade war under different scenarios of tariff and nontariff barriers and the battlefield spreading ranges. The present study found that although the trade war will cause a global economic downturn, which will seemingly reduce environmental pressure globally, global carbon emissions are expected to increase rather than decline. On the one hand, the CO2 emission increase caused by land-use changes in Brazil and Argentina will far exceed the emission reduction because of decreased global production. On the other hand, some countries/economies especially those developing countries such as Vietnam, Russia, and India will face emission increases driven by scale effects. Countries such as Korea, the UK, and France will enjoy a reduction in emissions driven by structural effects. China and the US will face a reduction in production and CO2 emissions, but their CO2 emission intensities will rise. The results remind us that as global production and supply chains are formed, it is important to closely monitor trade-related environmental impacts. Efforts should be made to balance the interests of trade and the environment.