The US-China trade war has roiled markets and hit the US economy by $7.8bn (£5.8bn), according to a new study by the National Bureau of Economic Research (NBER).
“After accounting for higher tariff revenue and gains to domestic producers from higher prices, the aggregate welfare loss was $7.8bn (0.04% of GDP),” the study found. The NBER paper was co-written by researchers at prestigious US universities UCLA, UC Berkeley, Columbia, and Yale.
Researchers added that “annual consumer and producer losses from higher costs of imports were $68.8bn (0.37% of GDP).”
Since July last year, US President Donald Trump has followed through on threats of extra tariffs on China, kickstarting a trade war with the country. The US has already slapped around $250bn worth of tariffs on Chinese products and the Trump administration has said it will ramp them up.
This has led to months of negotiations between the two countries. The Trump administration has since postponed a planned increase of China tariffs from 10% to 25%, which was originally scheduled for 1 March. A key meeting between Trump and Chinese president Xi Jinping has reportedly been postponed to at least April this year.
The findings from the NBER come a day after pro-trade advocacy group Tariffs Hurt the Heartland showed that trade wars cost consumers $20bn and US exporters $16bn, using data commissioned from market research firm Trade Partnership Worldwide.
When Yahoo Finance UK spoke to a raft of executives at the World Economic Forum in Davos, Switzerland earlier this year, the world’s most powerful people said that the US-China trade is the biggest threat to the global economy.