The effects of US-China trade war and Trumponomics

Olanyi  Evans

doi:10.23762/FSO_VOL7_NO1_3

Published : 2019-12-22

Vol. 7 No. 1 (2019)

The effects of US-China trade war and Trumponomics

Olanyi Evans

DOI: https://doi.org/10.23762/FSO_VOL7_NO1_3

Abstract

Trumponomics describes the economic policies of U.S. President Donald Trump and has an “America-first” approach. The Trump administration risks creating a more fragmented global economy, and has started the biggest global trade war to date. The various sides are still on tenterhooks and threatening to impose additional tariffs worth hundreds of billions of dollars. Using deadweight loss (also known as excess burden or allocative inefficiency) and Harberger’s triangle, this study shows that the trade war is devastating not just for the US and China, but for the entire global economy: (i) the prices of items that directly affect
consumers’ welfare will rise; (ii) firms will face extra costs for exports; (iii) investors will become more nervous; (iv) some investors will diversify into Bitcoin and other cryptocurrencies; (v) the trade war could turn into a currency war; (vi)even developed countries could be hit by the trade war; and
(vii) tariffs applied on developing countries’ exports would rise steeply. In a trade war, everyone may lose.

Keywords:

Trumponomics, US-China trade war, consumers, stocks, cryptocurrency, Brexit

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Evans, O. . (2019). The effects of US-China trade war and Trumponomics. Forum Scientiae Oeconomia, 7(1), 47–55. https://doi.org/10.23762/FSO_VOL7_NO1_3

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Olanyi Evans

oevans@pau.edu.ng

Affiliation:

School of Management and Social Sciences Pan Atlantic University, Lagos

Bio Statement (e.g., department and rank)

Olaniyi Evans is a faculty member at Pan Atlantic University, Lagos, Nigeria. His research interests encompass financial inclusion, digital economy and dynamic stochastic general equilibrium (DSGE) modelling from an African economic perspective. With snowballing citations, his scholarly publications proliferate in high-impact journals hosted by high-rank publishers such as Elsevier, Emerald, Sage, Springer, Taylor & Francis, and Wiley. Some of his bestselling books are How to Get a First-class Degree, The Firstclass You, Art of Research, iMathematics and iStatistics. Additionally, he is the founding editor of Business and Economic Quarterly.