Since early 2018, the United States’ administration has taken several measures to limit US imports, in particular from China. The affected countries retaliated. In addition to the measures already implemented, the belligerents currently contemplate two alternative routes: either open new fronts (particularly in the automotive industry, targeted primarily against the European Union and in particular Germany but also to Japan), or have a rest to avoid further damages. According to our estimates, the measures already implemented would cause significant value-added losses to China (USD 91 billion in the long run), but also to the United States (62 billion), due to the intertwining of global value chains. As in any war, imposing losses on an enemy comes at a high cost. If the tariff war were to escalate, German industry would pay a heavy toll. The opposite path, a lull through an agreement on industrial goods between the United States and the European Union, would avoid undesirable outcomes, but would bring little gain per se to the parties.

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 JEL : F12, F13, F17

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