Trade wars and other protectionist measures carried out by governments of different countries have cost the world economy $10 trillion. It is by this amount that global GDP will decrease by 2025 due to a decrease in imports, analysts from the Boston Consulting Group, together with the investment bank HSBC, calculated.
Multi-trillion-dollar losses are expected for the global economy if governments of different countries do not abandon duties and other barriers that hinder international trade and are designed to protect local producers in the home market. The losses will be especially significant against the backdrop of the ongoing crisis caused by the coronavirus pandemic.
The authors compiled two scenarios, each describing trade interactions between the G20 countries. The first implies a high level of freedom of trade with minimal restrictions, the second, on the contrary, the maximum possible number of them with further strengthening in the future.
In the first scenario, the total value of goods entering the international market increases annually by 2-2.6 percentage points, and world GDP вЂ” by 1.8-2.3 percentage points. The second scenario will mean the cessation of growth in the volume of foreign trade turnover and with it the growth of global GDP from the second year. At the same time, the authors did not consider the service market, limiting themselves to goods, which could mean even greater potential damage.
The positive effect of abandoning protectionist measures could reach $6.3 trillion by 2025, while the negative effect if they are preserved and increased, is $4.9 trillion. Analysts note that in the context of the coronavirus pandemic, free trade can benefit both individual countries and the world community as a whole.
To avoid negative consequences, it is necessary to strengthen the role and importance of international institutions such as the World Trade Organization (WTO), create a generally used set of rules aimed at reducing protectionism and its impact on the economy, and systematically introduce e-commerce technologies.
The trade war between the United States and China began in late 2017 with the imposition of restrictive tariffs on a number of Chinese goods. Subsequently, Beijing responded with mirror measures, and other countries, including the European Union, joined the confrontation. In January 2020, the United States and China entered into the first phase of a global deal that would end the trade war. It provided for increased purchases of American goods by China, mainly agricultural. However, its full implementation and preparation of the second phase were disrupted due to a sharp decline in global demand amid the crisis.