Purpose The purpose of this study is to analyze the economic impact of weaponization of trade by the USA. We analyze four trade policies scenarios by examining a 2024 presidential campaign proposal, in which China and other countries and regions are affected by sanctions imposed by the USA. Design/methodology/approach The sample for this study includes 50 countries and regions (49 economies and 27 EU member states), encompassing 15 aggregated industries. The study employs multi-country multi-sector computable general equilibrium (CGE) model that integrates non–log-linear input-output linkages to analyze these scenarios. Findings The simulation results indicate that while the USA may achieve some net gains by increasing tariffs, it incurs economic costs when China and other trade partners retaliate. The trade war between the USA and China has significantly reduced trade share between the two countries, leading to trade diversion to other countries and regions. Shifts in the distribution of global trade indicate that global supply chains demonstrate resilience in adapting to new geopolitical tensions by diverting trade around the USA. Research limitations/implications This benchmark model assumes that labor is the only factor of production and does not account for foreign direct investment flows or technology transfers. Practical implications US trade policies are likely to impose economic losses on the majority of countries and regions, resulting in a significant realignment of global trade shares. Hence, policymakers should use trade negotiations to mitigate the economic impact of tariffs by granting exemptions for certain critical products. Social implications This paper focuses specifically on weaponization of trade and analyses the impacts of tariff increases under four simulated scenarios, fully accounting for the current structural changes in global value chains (GVCs). We provide a comprehensive analysis of the beneficiaries and de-tractors of the weaponization of US trade, focusing on the shifts in trade share. Originality/value This study is a unique empirical exercise that simulates the potential impact of trade policies that may be implemented after Trump's return. The first contributions of this paper lies in the utilization of the latest 2023 release of the Organization for Economic Co-operation and Development inter-country input-output data, which is applied in a CGE model incorporating non–log-linear input-output linkage analysis. This approach enables a comprehensive review of US trade policy following Trump's return, taking into full account the current structural changes in GVCs through simulation analysis. The second contribution is to use these quantitative results of protectionism to characterize changes in global trade shares. We provide a more detailed analysis of the beneficiaries and detractors of the weaponization of US trade in terms of trade share shifts.
Dong et al. (Tue,) studied this question.