ISSN 1019-3316, Herald of the Russian Academy of Sciences, 2019, Vol. 89, No. 4, pp. 432–440.

© Pleiades Publishing, Ltd., 2019.

Russian Text © The Author(s), 2019, published in Vestnik Rossiiskoi Akademii Nauk, 2019, Vol. 89, No. 7, pp. 745–754.

Abroad

Modern Tools for Evaluating the Effects of Global Trade Wars

V. L. Makarova,b,*, J. Wuc,d,e,**, Z. Wuc,***, B. R. Khabrieva,f,****, and A. R. Bakhtizina,b,*****,#
a Central
Economics and Mathematics Institute, Russian Academy of Sciences, Moscow, Russia
b
Russian University of Economics, Moscow, Russia
c
Guangzhou Milestone Software Co., Ltd., Guangzhou, China
d Center for Economic and Social Integration and Forecasting, Chinese Academy of Social Sciences, Beijing, China
e
Guangdong Academy of Social Sciences, Guangzhou, China
f LLC RT-Business Development, Moscow, Russia

*e-mail: makarov@cemi.rssi.ru
**e-mail: jw@gzmss.com
***e-mail: wzl@gzmss.com
****e-mail: khabrievbulat@me.com
*****e-mail: albert.bakhtizin@gmail.com
Received February 8, 2019; revised March 2, 2019; accepted April 5, 2019

Abstract—This article reviews the most well-known tools for quantifying the effects of trade wars. The most
highly cited works on mathematical models that simultaneously consider the economic systems of several
states participating in international relations are analyzed. The analysis showed some bias of the results in
favor of certain countries and a lack of consideration of the specific features of the economic systems of most
of the subjects under study. We will present information about the model complex being developed for eval-
uating the effects of intercountry trade wars and the results of its use for calculating measures taken by other
countries against Russia and China in the next article.

Keywords: trade wars, international relations, economic and mathematical models, computational experi-
ments.
DOI: 10.1134/S1019331619040063

Relationships between major global players, pri-
marily the United States and China, have entered a
phase of open economic confrontation which affects
the interests of other states as well. According to the
World Bank, the volume of world trade as a percentage
of global GDP increased from below 25% in the 1960s
to 56% in 2017 with a tendency toward further growth.1
The world’s largest exporters and importers have a
strong influence on the development of the entire
global economy, because trade has been and remains
# RAS
Academician Valerii Leonidovich Makarov is Scientific
Supervisor of the RAS Central Economics and Mathematics
Institute and Laboratory Head at the Russian University of Eco-
nomics. Jie Wu is Chair of the Board of Guangzhou Milestone
Software Co., Ltd.; Researcher at the Center for Economic and
Social Integration and Forecasting, Chinese Academy of Social
Sciences; and Guest Professor of the Academy of Social Sci-
ences of Guangdong Province. Zili Wu is Vice Chair of the
Board of Guangzhou Milestone Software Co., Ltd. Bulat Rami-
lovich Khabriev is a Transaction Support Manager of RT-Busi-
ness Development LLC and a Postgraduate Student of the RAS
Central Economics and Mathematics Institute. RAS Corre-
sponding Member Al’bert Raufovich Bakhtizin is Director of
the RAS Central Economics and Mathematics Institute.
1 https://data.worldbank.org/indicator/NE.TRD.GNFS.ZS.
one of the most powerful factors of economic growth,
and the interdependence of the countries involved in
international trade is constantly increasing. The first
two places among such states are held by the United
States and China, by a large margin (Fig. 1).
According to the World Trade Organization
(WTO), exports of goods and services from the United
States in 2017 amounted to $2.309 trillion while
imports were at US$2.926 trillion. Therefore, the
trade deficit has reached a record of US$617 billion
over the past ten years. Trade excluding services shows
an even greater disproportion: exports of
US$1.547 trillion and imports of US$2.410 trillion,
i.e., the trade imbalance is US$863 billion taking into
account that the service sector amounts to almost 80%
of the US GDP.
China, the largest US trading partner, exported
goods worth US$505.5 billion and imported goods
worth US$129.9 billion in 2017. Therefore, the US
trade deficit with China amounted to US$375.6 bil-
lion, i.e., about 44% of the total negative trade balance
of the United States, and it only increases from year to
year (Fig. 2). The same situation, but on a smaller

432
 MODERN TOOLS FOR EVALUATING THE EFFECTS OF GLOBAL TRADE WARS 433

Italy
Republic of Korea
Netherlands
Hong Kong
France
United Kingdom
Japan
Germany
China
United States
0 500 1000 1500 2000 2500

United Kingdom
Italy
France
Hong Kong
Republic of Korea
Netherlands
Japan
Germany
United States
China

0 500 1000 1500 2000 2500

Fig. 1. (Color online) Top 10 countries in imports (left) and exports (right) of goods in 2017, billion US dollars. Source: [1].

scale, is characteristic of other US trading partners,
i.e., Mexico, Japan, and Germany.2 In the short
term, the Administration of D. Trump sees the solu-
tion to the problem in introducing customs barriers,
i.e., setting import duties, technological require-
ments, etc.
The next stage of the confrontation of the world’s
largest players unfolds from the end of 2016. During
the election campaign, Trump made several state-
ments in which he announced an increase in import
duties on goods from China, Mexico, and Germany.
In particular, he announced setting “tariffs of 35 per-
cent on Mexican imports and 45 percent on Chinese
imports to protect American jobs from unfair foreign
competition.”3 However, 2018 can be called the offi-
cial start of the US–China trade war. The timeline of
significant events is as follows:
• On January 22, 2018, the United States imposed
30% import duties on solar batteries imported from
China.4
2 Read more at: http://data.wto.org/.
3 https://www.foxnews.com/politics/for-americans-trumps-tar-
iffs-on-imports-could-be-costly.
4 http://time.com/5113472/donald-trump-solar-panel-tariff.
• On March 22, 2018, a 25% increase in tariffs on
more than 1300 goods imported from China to the
United States worth about US$50–60 billion (medical
devices, aircraft parts, TV sets, satellites, etc.) was
announced.5
• On April 2, 2018, China announced a 15–25%
increase in duties on goods imported from the United
States (more than 100 categories of goods including
aluminum, cars, pork, soybeans, fruits, nuts, steel
pipes, etc.).6
• On June 15, 2018, the United States announced
the introduction of 25% import tariffs on Chinese
goods totaling US$34 billion starting July 6, 2018, and
later on a number of goods worth US$16 billion.7
5 https://edition.cnn.com/2018/03/22/politics/donald-trump-
china-tariffs-trade-war;
https://www.nytimes.com/2018/04/03/us/politics/white-
house-chinese-imports-tariffs.html.
6 https://www.bloomberg.com/news/articles/2018-04-04/as-
china-fires-back-in-trade-war-here-are-the-winners-and-los-
ers.
7 https://www.washingtonpost.com/business/economy/trump-
imposes-import-taxes-on-chinese-goods-and-warns-of-addi-
tional-tariffs/2018/06/15/da909ecc-7092-11e8-bf86-
a2351b5ece99_story.html.

HERALD OF THE RUSSIAN ACADEMY OF SCIENCES Vol. 89 No. 4 2019

434 MAKAROV et al.

billion US dollars
600
500
400
300
200
100
0
−100
−200
−300
−400
−500
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Exports Imports Trade imbalances

Fig. 2. US trade volume with China: a rapidly growing trade imbalance. Source: https://www.census.gov/foreign-trade/bal-
ance/c5700.html.

• On June 19, 2018, China responds tit-for-tat by
increasing duties on imports from the United States
totaling US$50 billion.
• On July 6, 2018, the previously announced US
tariffs on Chinese goods worth US$34 billion came
into force.8
• On July 10, 2018, the United States imposed 10%
import duties on Chinese goods worth US$200 bil-
lion.
• On August 3, 2018, the Ministry of Finance of
the People’s Republic of China launched a second
round of countermeasures by imposing 10% tariffs on
5207 goods from the United States totaling US$60 bil-
lion.9
• On August 8, 2018, a list of 279 Chinese goods
worth US$16 billion is specified that will be subject to
a 25% duty starting August 23, 2018.10
• On August 23, 2018, the previously announced
25% US import tariffs on goods totaling US$16 billion
came into effect.11
• On September 17, 2018, the United States
announced the introduction of 10% import duties on
goods worth US$200 billion starting September 24,
8 https://www.bbc.com/news/business-44707253.
9 https://www.caixinglobal.com/2018-08-03/china-vows-retalia-
tory-tariffs-on-60-billion-in-us-goods-101311586.html.
10https://www.reuters.com/article/us-usa-trade-china/u-s-final-
izes-next-china-tariff-list-targeting-16-billion-in-imports-
idUSKBN1KS2CB.
11https://www.livemint.com/Politics/A2IdtmZ8uvZfucl9XG0-
niO/US-China-resume-trade-talks-as-Trump-imposes-new-
tariffs.html.
2018, and an increase to 25% by the end of the year. In
addition, the United States is ready to expand the
amount of dutiable imports to US$267 billion if China
retaliates.12
• On September 18, 2018, China announces a 10%
tariff on imports from the United States totaling
US$60 billion starting September 24, 2018.13
• December 1, 2018, an agreement was reached to
halt new trade tariffs for 90 days.14
Note that the United States took similar actions
with respect to the European Union, Japan, Canada,
Mexico, Brazil, Australia, etc. The United States will
most likely maintain an aggressive strategy with
respect to its trading partners in the foreseeable future.
In this regard, it is crucially important to develop soft-
ware and analytical systems for analyzing social and
economic processes at various levels (the whole world
or a particular country, a region, or a selected indus-
try) and tracking emerging multiplicative effects that
manifest themselves for all countries participating in
international relations. The purpose of this article is to
consider the most well-known tools for quantifying
the effects of trade wars.
The literature on trade wars is very extensive, but
most of the work is theoretical, uses simplified math-
ematical tools for one- or two-product models, and
12https://www.reuters.com/article/us-usa-trade-china-tar-
iffs/trump-slaps-tariffs-on-200-billion-in-chinese-goods-
threatens-267-billion-more-idUSKCN1LX2M3.
13https://www.cnbc.com/2018/09/18/china-says-new-tariffs-on-
us-goods-worth-60-billion-effective-sept-24.html.
14https://www.bbc.com/news/world-latin-america-46413196.

HERALD OF THE RUSSIAN ACADEMY OF SCIENCES Vol. 89 No. 4 2019

 MODERN TOOLS FOR EVALUATING THE EFFECTS OF GLOBAL TRADE WARS
also considers a very limited set of countries, often
abstract ones. However, it was demonstrated already
in the famous work by Johnson (1953) that large coun-
tries usually benefit from a trade war, while small ones
lose [2]. Further studies suggest that in general global
trade wars are detrimental to all countries, global indi-
cators decline, but at the same time large countries
tend to be in a better position than small countries.
In this article, we focus on studies that meet three
criteria. First, works should correlate with recent
global events. Second, they should use mathematical
methods for evaluating the consequences of decisions
made by subjects of international relations who have
both direct and indirect influence on other partici-
pants in international trade. Third, the models
described in the works should be based on real data
and used for calculating the effects of trade wars.
It should be noted that the analytical centers of the
United States and China have long assumed the possi-
bility of imposing mutual sanctions and calculated
consequences in advance. In addition to classified
research, scientific articles were openly published in
which hypotheses were put forward about a possible
trade war between the United States and the People’s
Republic of China and a corresponding evaluation of
measures was carried out. In particular, in one of the
works of 2012, a general equilibrium model was given
that describes trade relations between the enlarged
participants (United States, China, European Union,
Japan, and the rest of the world) [3]. The results of
computational experiments that simulate the step-by-
step mutual increase in duties of the United States and
China on imported goods from 25% to 100% in gen-
eral showed that trade wars lead to a slight drop in the
level of well-being of the residents of these countries.
China’s indicators fall more than for other partici-
pants. The main indicator monitored in the calcula-
tions was the level of social security of citizens. There-
fore, with the introduction of mutual 25% import tar-
iffs, the standard of living in the United States will
increase by 0.31%, while in China and the rest of the
world it will decrease by 0.15% and 0.04%, respec-
tively. If the duties will be increased by 100%, the stan-
dard of living in the United States will increase by
0.91%, and in China and the rest of the world it will
decrease by 0.51% and 0.13%, respectively.
Studies to evaluate the effects of alleged wars of
various types with China (trade, information, and
direct clashes using combat units and military equip-
ment) are also conducted at the RAND Corporation,
a US strategic research center that carries out commis-
sions for government agencies including the Pentagon.
In particular, the consequences of a partial and com-
plete cessation of trade were evaluated. According to
calculations, in the first year of the most stressful sce-
nario, which envisages a complete cessation of trade,
the US GDP will decrease by 6%, and China’s GDP,
by 10% [4].
HERALD OF THE RUSSIAN ACADEMY OF SCIENCES
435
One of the most well-known projects in the field of
developing trade war quantifying tools is The Global
Trade Analysis Project (GTAP). This is an interna-
tional consortium that unites representatives of vari-
ous fields (government officials, businessmen, etc.)
but primarily scientific researchers involved in quanti-
tative analysis of international relations. GTAP was
established in 1992 and is currently a kind of standard
for constructing global models using a common meth-
odology based on the Computable General Equilib-
rium (CGE) approach as well as a global database.
This database is designed for integration into model
complexes implemented based on a common method-
ology, and is in demand by thousands of researchers
around the world. The scope of the project is truly
global: the number of permanent members of the con-
sortium is 18000 people from 176 countries.
All models developed using the GTAP methodol-
ogy include not one country but either a group of
countries or the whole world. In addition, GTAP
models are general equilibrium models. Therefore, the
economic systems of the countries under consider-
ation are represented not by an individual sector but by
all of their sectors. The GTAP methodology covers
many specific problems, which were most extensively
described in [5]. Special aspects of the use of a global
database were considered in [6]. We will focus on
reviewing the most well-known models constructed
under the GTAP project.
WorldScan is a model complex that includes CGE
models for analyzing macroeconomic processes at
various levels (global, particular country, region, or
industry). It is constructed using the GTAP method-
ology. It considers 29 product groups (products of
industrial production, agriculture, transport, commu-
nication, financial services, etc.), which are traded in
30 individual countries that have the highest weight in
global GDP and enlarged regions that include several
countries. The participants in international trade
include (1) Austria, (2) Belgium and Luxembourg,
(3) Denmark, (4) Finland, (5) France, (6) Germany,
(7) Greece, (8) Ireland, (9) Italy, (10) the Nether-
lands, (11) Portugal, (12) Spain, (13) Sweden,
(14) Great Britain, (15) the remaining European
Union countries, such as Bulgaria, Croatia, Cyprus,
the Czech Republic, Estonia, Hungary, Latvia, Lithu-
ania, Malta, Poland, Romania, Slovakia, and Slove-
nia, (16) United States, (17) Mexico, (18) Canada,
(19) Australia, (20) Japan, (21) South Korea, (22) the
rest of the OECD countries, such as Chile, Israel, New
Zealand, Norway, Switzerland, Turkey, Taiwan, and
the rest of the countries of the European Free Trade
Association (Iceland and Liechtenstein), (23) the rest
of the countries of Eastern Europe, such as Albania,
Belarus, Russia, Ukraine, Moldova, and the rest of
Europe, (24) China and Hong Kong, (25) countries
of the Association of Southeast Asian Nations,
(26) India, (27) the countries of the Middle East and
North Africa, (28) Sub-Saharan African countries,
Vol. 89 No. 4 2019
436 MAKAROV et al.
Table 1. Changes in GDP of a number of countries in 2030 compared to the reference values of this indicator and depending
on changes in import tariffs, WorldScan simulation results, %
All European
Increase in
United States China Union
duties, %
countries
2.5 –1.4 –2.1 –1.1
5 –2.3 –3.1 –1.7
10 –2.9 –3.8 –2.0
15 –3.1 –4 –2.1
(29) Latin American and Caribbean countries, and
(30) the rest of the world.
Goods and services in the model are produced
using resources (labor, capital, and intermediate prod-
ucts), the contribution of which is determined by the
parameters of the corresponding production function.
Households form demand for goods and services
depending on prices and income, save and invest part
of the funds, and also provide labor supply for the
labor market. Everything is interconnected in the
model. Therefore, the supply and demand for a certain
product in a particular country is formed taking into
account the demand and supply for this product in
other countries, and the price depends on the substi-
tution opportunities, transportation costs, trade barri-
ers, and other factors.
WorldScan was used consistently for individual
countries or simultaneously for all countries to assess
the impact of tariff increases on particular types of
products (for example, aluminum) and the industry as
a whole. The calculations showed that the electronics
industry, engineering, and agriculture are the sectors
of the United States and China that are most sensitive
to trade wars.
Although the list of output indicators of the model
is very wide, for brevity, we present the results of cal-
culations of the effects of a consistent increase in
import tariffs for all groups of goods included in the
model (from 0 to 15%) traded by all the states used in
the model and consider only the GDP of some coun-
tries (Table 1). The main conclusion is as follows: the
escalation of a trade war is disadvantageous to every-
one, but the United States wins if it escalates unilater-
ally with respect to the European Union countries,
Canada, and mainly China. If the United States and
China respond tit-for-tat, China will suffer great
losses, the same is true in the case of a large-scale
trade war. It should also be noted that the negative
effects are amplified disproportionately to the increase
in import tariffs because the agents of the model adapt
to the new conditions [7].
GLOBE is another global multisectoral model
developed using the GTAP methodology. It was cre-
ated by specialists from the University of Hohenheim
(Stuttgart, Germany) and the United States Naval
HERALD OF THE RUSSIAN ACADEMY OF SCIENCES
Japan South Korea Canada Mexico
–4.3 –6.4 –1.1 –1.2
–6.4 –9.3 –1.8 –1.9
–7.7 –11.1 –2.1 –2.3
–8.1 –11.6 –2.2 –2.5
Academy. It was used to evaluate the effects of trade
wars between the countries of the North American
Free Trade Zone governed by the North American
Free Trade Agreement (NAFTA) [8]. Quite a few
experiments have been conducted using this model.
Table 2 presents the results of calculations for the main
indicators obtained in two scenarios. The first is the
termination of the NAFTA agreement and the intro-
duction of most favored nation (MFN) trade between
the United States, Canada, and Mexico. The second
scenario assumes a 25% increase in US import duties
on Canada and Mexico and a tit-for-tat response from
these countries while maintaining the same trade
regime between them. Other detailed results showing
the effects of a trade war on a wide range of sectors of
the economy were described in [9].
The International Food Policy Research Institute
(Washington, United States) proposed a multicountry
multisector CGE model MIRAGRODEP based on the
more general model MIRAGE (Modeling Interna-
tional Relationships under Applied General Equilib-
rium) and the GTAP methodology. The results
obtained using it repeat the above estimates with small
variations. Therefore, if 35% US import tariffs are
introduced against China and Mexico, the standard of
living in these two countries will decrease in the range
from –0.3 to –1.0% for China and from –0.3 to
‒3.2% for Mexico (depending on the product groups
for which duties are imposed) with respect to the ref-
erence case in which no measures are expected. How-
ever, all the calculated options entail a slight decrease
in the above-mentioned indicator (in the range from
‒0.1 to –0.2%) for the United States. More details on
the results of the implementation of 18 scenarios of
a trade war can be found in [10].
Table 2. Changes in GDP relative to the reference case as
a result of the implementation of two scenarios of changes
in the trade regime between NAFTA countries, GLOBE
simulation results
Scenario United States Mexico Canada
1 –0.23 –4.62 –0.05
2 –0.37 –4.63 –1.35
Vol. 89 No. 4 2019
 MODERN TOOLS FOR EVALUATING THE EFFECTS OF GLOBAL TRADE WARS
A global CGE model for evaluating the effects of the
trade war between the United States and China was
developed by the Center for International Trade and
Economics and the Institute of World Economy and
Politics of the Chinese Academy of Social Sciences. It
includes 29 individual states as well as grouped coun-
tries: (1) Australia, (2) Bahrain, (3) Brazil, (4) Brunei,
(5) Canada, (6) Chile, (7) China, (8) the European
Union, (9) India, (10) Indonesia, (11) Japan,
(12) Korea, (13) Kuwait, (14) Malaysia, (15) Mexico,
(16) New Zealand, (17) Oman, (18) Papua New
Guinea, (19) Peru, (20) Philippines, (21) Qatar,
(22) Russia, (23) Saudi Arabia, (24) Singapore,
(25) Thailand, (26) the United Arab Emirates,
(27) the United States, (28) Vietnam, and (29) the rest
of the world.
Production factors in the relevant production func-
tions with constant elasticity of substitution include
labor, capital, and goods associated with intermediate
consumption. Statistical information is taken from the
state statistics of the respective countries as well as
from the World Bank database. Trade data is taken
from the UN Commodity Trade Statistics Database,
which contains detailed information on trade relations
between almost all countries of the world since the
beginning of the last century. Trade costs are divided
into two components in the model: tariffs on imported
goods (for this purpose, WTO statistics are used) and
nontariff barriers calculated as the difference between
trade costs and import duties.
Many experiments were carried out under several
trade war scenarios using the developed global model
including the following:
• Unilateral actions aimed at increasing import
tariffs and mutual measures of the United States and
China.
• Mutual introduction of duties as well as nontariff
barriers between the United States and China.
• Simultaneous introduction of import tariffs by
the United States against China and Mexico.
Duties on all goods imported into the country at
once were considered as part of experiments, although
the model makes it possible to evaluate the effects of
changes in tariffs on a specific product group. Results
in terms of GDP (by country) and for a limited set of
scenarios are shown in Table 3. It can be seen that in
general the consequences of a mutual increase in trade
duties have more negative consequences for China
than for the United States. GDP and production in the
United States increase in almost all cases (not only
presented in the table) but employment rates suffer.
The involvement of Mexico in a trade war with the
United States introduces certain adjustments and
slightly worsens the position of US companies. Most
other countries improve their trade indicators, but at
the same time GDP, production, and most of all,
employment, suffer. Therefore, the trade war between
the United States and China has a negative effect on
HERALD OF THE RUSSIAN ACADEMY OF SCIENCES
437
the world as a whole: almost all indicators decline with
the exception of the nonproduction sector [11].
The global model KPMG-MACRO was developed
in the Australian division of KPMG, which is part of
the so-called Big Four of the largest companies pro-
viding auditing and consulting services. It is con-
structed based on the National Institute’s Global
Econometric Model (NiGEM), a quarterly macro-
economic model supported by the National Institute
of Economic and Social Research and used by the
Treasury of the United Kingdom, the International
Monetary Fund, the Bank of England, the Organiza-
tion for Economic Cooperation and Development
(OECD), and the European Central Bank for a wide
range of studies. KPMG-MACRO considers more
than 60 countries interacting in the financial and com-
modity markets and the labor market [12]. Many cal-
culations have been conducted using the model. The
main results are given in Table 4.
Moody’s Analytics and Moody’s Research Labs
Inc. calculated the effects of a trade war between the
United States and China with a mutual increase in
import tariffs. The calculations were conducted using
the global macroeconomic model, which is a large sys-
tem of simultaneous econometric equations and con-
siders 64 countries that together produce more than
95% of global GDP (in the context of more than 10000
indicators) [13]. According to the results, US GDP
will decline by 1.9 pp if import duties increase by 25%
by 2020 relative to the inertial variant of economic
development and the unemployment rate will be
higher than 5%.
Other major international organizations have also
developed their own multicountry models. For example,
the OECD’s New Global Model includes enlarged terri-
tories, such as (1) the United States, (2) Japan, (3) China,
(4) the Eurozone countries, (5) other European OECD
countries, (6) other OECD countries, (7) non-OECD
countries of Asia, (8) non-OECD European coun-
tries, (9) and non-OECD countries of Africa, the
Middle East, and Latin America [14]. The Interna-
tional Monetary Fund has developed a number of
models, e.g., MULTIMOD, GEM, and one of the
most recent, the Global Macrofinancial Model
(GFM), which belongs to the class of dynamic sto-
chastic general equilibrium models (DSGE) and con-
siders more than 40 of the largest global economies
[15]. The Long-Term Growth Model should be noted
among the models of the World Bank.
Special mention should be made of the LINK proj-
ect, which is a consortium of researchers from more
than 100 countries. It is managed by the Project
Research Centre at the University of Toronto as well as
by the United Nations Department of Economic and
Social Affairs. The project was initiated in 1968 under
the auspices of the U.S. Social Science Research
Council and the leadership of Nobel Laureate Law-
rence Klein. The main objective of the project is quan-
Vol. 89 No. 4 2019
438 MAKAROV et al.

Table 3. Changes in GDP as a result of the implementation of various trade war scenarios (for the case of the introduction
of tit-for-tat trade tariffs by both countries involved in a trade war) compared to the reference values of the indicator, the
results of experiments using the global model for evaluating the effects of the trade war between the United States and China
Trade war between China, the United States,
US–China trade war
and Mexico
Country United States–China United States–China
United States–China United States–China
(45%), United States– (45%), United States–
(15%) (60%)
Mexico (20%) Mexico (35%)
China –0.667 –1.79 –1.518 –1.518
United States 0.007 0.126 –0.074 –0.134
European Union –0.024 –0.057 –0.055 –0.055
Japan –0.044 –0.11 –0.102 –0.104
Korea –0.102 –0.261 –0.239 –0.242
Canada –0.006 0.023 –0.023 –0.031
Australia –0.084 –0.222 –0.208 –0.216
New Zealand –0.299 –0.803 –0.755 –0.79
Singapore –0.108 –0.283 –0.263 –0.272
India –0.065 –0.169 –0.161 –0.168
Russia –0.058 –0.152 –0.141 –0.145
Brazil –0.054 –0.141 –0.138 –0.145
Mexico –0.014 0.006 –3.096 –4.543
Indonesia –0.114 –0.301 –0.281 –0.291
Malaysia –0.204 –0.535 –0.5 –0.518
Philippines –0.239 –0.638 –0.596 –0.62
Thailand –0.176 –0.462 –0.427 –0.44
Vietnam –0.298 –0.788 –0.739 –0.768
Peru –0.276 –0.737 –0.707 –0.744
Brunei –0.098 –0.255 –0.23 –0.235
Rest of the world –0.046 –0.111 –0.101 –0.101
World –0.114 –0.277 –0.336 –0.376

Table 4. Average annual loss as a result of the introduction of import tariffs during the trade war: the change in GDP of states
relative to the reference scenario, KPMG-MACRO simulation results
Scenario

Country Trade war between the United

The United States and China United States and China impose
States and China extends to other
impose mutual 15% import duties mutual 25% import tariffs
countries, 15% increase in duties
Australia –0.3% –0.5% –2.4%
United States –0.4% –0.7% –4.6%
China –0.6% –1.0% –5.3%
Europe –0.2% –0.3% –2.1%
World –0.3% –0.5% –3.5%

tifying foreign policy measures developed by the US
State Department, and the main result was the inte-
gration of national econometric models of the coun-
tries participating in the project into a single global
econometric model15.
15https://www.un.org/development/desa/dpad/document_gem/
link-global-economic-outlook-report.
The experience of implementing the LINK project
made it possible to start developing the World Eco-
nomic Forecasting Model (WEFM) in 2005. Cur-
rently, the model includes 176 countries and about
60 monitored indicators for each of them [16]. The
methodology developed for the WEFM is also used in
the multicountry model of the European System of
Central Banks (ESCB) Multi-Country Model imple-

HERALD OF THE RUSSIAN ACADEMY OF SCIENCES Vol. 89 No. 4 2019

 MODERN TOOLS FOR EVALUATING THE EFFECTS OF GLOBAL TRADE WARS
mented for France [17], the Netherlands [18], Ger-
many [19], Italy [20], and Greece [21].
The following conclusions can be made based on
the above forecasts:
• The state of all countries of the world involved in
“battles” (both directly and indirectly) will deteriorate
as a result of global trade wars.
• Losses for large countries with resilient and
diversified economies are less noticeable compared to
smaller countries.
• A country that initiates an increase in import tar-
iffs is usually in a better position than the country
against which these measures are taken.
Models and calculations that are not mentioned in
our review do not bring anything conceptually new
and do not change the conclusions made as a result of
the conducted analysis of the most cited works in the
field of evaluating the effects of trade wars. First, at
present, there is a large number of different models
that describe the economic systems of individual
countries, but only in rare cases are several states
simultaneously taken into account in them. Second,
models that are available for analysis are overwhelm-
ingly CGE-models, which somewhat reduces their
realism, because the equilibrium approach is good for
analyzing balanced and sustainable economic systems
but many countries do not meet this criterion. Third,
the analysis of foreign models and their results leaves a
feeling of bias in favor of certain states. Therefore, the
evaluation results seem less reliable. Fourth, models
that include a group of states are developed by research
teams usually only from one country, and the specific
features of other countries are not fully taken into
account. Fifth, freely available model descriptions as
well as their closed counterparts do not have available
computer implementations that can be used. This
makes it extremely difficult to replicate and conduct
additional calculations by other researchers given that
the development of such tools is a time and resource
consuming process (financially and intellectually).
Finally, it should be noted that the world’s largest
players, primarily the United States and China, are of
the greatest interest in the development of global mod-
els and the evaluation of the effects of trade wars in the
context of modern realities. In particular, Russia is
considered as a separate subject in far from all experi-
ments, and in most models, it is included in the group
of countries under the common name “the rest of the
world.” This situation leaves the questions of interest
to the Russian part of the group of authors of this arti-
cle unresolved. Until now, the sanctions imposed
against Russia have not yet become widespread, but a
number of countries can initiate the process of intro-
ducing import duties on Russian exports under US
pressure. The need to have an idea of how such scenar-
ios can affect the national economy makes it extremely
important to develop and put into practice an effective
tool for evaluating the effects of intercountry trade
HERALD OF THE RUSSIAN ACADEMY OF SCIENCES
439
wars, which would make it possible to calculate mea-
sures directed by other countries against Russia and
China.
At the time of this writing, there is some slack in
establishing trade barriers. It is quite possible that this
is because the predicted results do not suit the main
initiator of trade wars. However, everything can heat
up at any time. It was important for us to provide infor-
mation about current projects to evaluate the effects of
such interactions and to show the capabilities of mod-
ern tools for their modeling. The next problem, which
we plan to consider in the next article, is analysis of the
obtained results using the software-analytical model
complex for evaluating the effects of trade wars devel-
oped jointly with the Chinese Academy of Social Sci-
ences and the National Supercomputer Center of
China. This work is carried out within the integrated
research plan (IRP) Scientific Support for the Cre-
ation and Development of a System of Distributed Sit-
uational Centers Operating under a Single Interaction
Policy initiated by the Ministry of Science and Higher
Education of the Russian Federation (under the lead-
ership of Academician I.A. Sokolov and Doctor of
Engineering A.A. Zatsarinnyi and under the supervi-
sion of the Deputy Head of the Special Communica-
tions and Information Service of the Federal Security
Service of the Russian Federation and Doctor of Engi-
neering N.I. Il’in) and also within the IRP Mathemat-
ical and Socioeconomic Modeling for Countering
Money Laundering and Terrorist Financing” (per-
formed under the supervision of Rosfinmonitoring).
In accordance with the IRP, the development of
the existing system of distributed situational centers of
state and local authorities, the modernization of their
functional and technological base as the most effective
tool for coordinating strategic planning and improving
the efficiency of public administration, monitoring
progress toward national goals, and implementing
national projects should be prioritized. It is extremely
important to establish a typical set of models, algo-
rithms, and methods for solving problems of multivar-
iate analysis, forecasting, current planning (sectoral
and territorial), strategic planning, management of
federal and regional programs, i.e., tools that will also
provide a quantitative evaluation of the effects of their
implementation.
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Translated by O. Pismenov
Vol. 89 No. 4 2019