The Impact of Trump 2.0 Tariff Policy on International Trade: Evidence from Chinese Firms

The tariff policies implemented by Trump during his second term have caused systemic disruptions to the global trade system, exacerbating uncertainties in the global economic order. First, we estimate the key parameters of the model using the simulated method of moments based on export data from Chinese firms. Then, we embed the model within a general equilibrium framework. Utilizing the estimated key parameters, we simulate two tariff scenarios: one reflecting the actual scenario of increased tariffs imposed by Trump on countries worldwide during his second term, and another where tariffs between countries are reduced by 5%. Under Trump's tariffs: 1.The EU's export share to the US drops by 65.77%, and China's by 44.44%. 2.Denmark's price index rises by 5.62%, while China's increases by 0.21% and the US's decreases by 1.2%. 3.Real wages in Africa increase by 16.37%, while Asia sees a 3.49% rise. Global trade welfare slightly declines. With a 5% tariff reduction: 1.Domestic sales shares fall, with Slovenia's dropping by 15.27%, China's by 0.57%, and the US's by 1.74%. 2.Global trade welfare improves, with Belgium experiencing a 1.81% increase.