The Future of RCEP after "Make America Great Again" (How will the US trade tensions reverberate in the Asia-Pacific region?)
The Future of RCEP after "Make America Great Again" (How will the US trade tensions reverberate in the Asia-Pacific region?)

Summary/Abstract: The aim of this study is to examine the economic effects of the trade dispute between the United States (US) and China that began in 2018, as well as its geopolitical impact on the members of the Regional Comprehensive Economic Partnership (RCEP). The study reveals that the US's 104% and China's 84% tariff rates significantly eroded and reduced gross domestic product (GDP) and trade volumes in these two countries. Overall, a large part of the economic cost incurred between the countries in question stems from the misallocation of resources and loss of welfare experienced by domestic consumers, and it has been determined that this is the result of the negative effects of unilateral protectionist measures. While the domestic manufacturing sector in the US faces negative effects on its competitiveness, China's investment in the semiconductor and electronics sectors with the aim of reducing its dependence on foreign trade is expected to provide an advantage in terms of commercial autonomy. Furthermore, the trade flow to RCEP countries is among the noteworthy findings of the study. High tariff rates between the US and China point to an increase in imports from RCEP countries and potential intra-regional economic advantages. Alongside strong growth in the electronics and automotive sectors, exports from China to regional countries increased by 6.8%. These results demonstrate that regional trade integration and flexible trade policies are resilient to tariff wars and reduce economic costs.

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