Economic Implications of US-China Trade War for Pakistan Economy

Abstract

The global economy is based on trade, which is the exchange of products between nations. A number of variables, including global events, exchange rates, and protectionism, can have an impact on pricing. Production costs and labor pay in one nation may be impacted by political change in another. Since the 2018, the two world largest economies, the USA and China, exchanged rounds of imposing of import tariffs against each other, and this escalated into the US–China trade war. This trade war highly impacted the all our world. The main purpose of present study was to highlight the impact of the trade war on welfare of world and also check the macro level impact on the world. Secondary data used in this study which collected from United Nation Commodity Trade Statistics Database.  The researcher took six factors for the present study such as real GDP, imports, exports, market prices, real factor wages and terms of trade. In this study Computable general equilibrium model and GTAP model were used to find out the war impacts. Overall finding shows that there is a significant war impact on global world. There is positive and strongly significant impact on macroeconomics variables .There is a tough competition between both economies United State and China. The study suggested that this trade war is opportunity as well as challenge for Pakistan therefore; prudent and efficient policy making is anticipated for smooth and sustained growth.