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.