Evaluating the Impact of the US–China Trade War on Euro Area Economies: A Tale of Global Value Chains

The US–Sino trade war will have significant repercussions on the global trade system. This study assesses the implications of the successive rounds of tariff hikes implemented by the US and Chinese governments on global value chains, with a focus on the major European Union economies. The evaluation is based on a computable general equilibrium model which incorporates a decomposition of trade in a value-added basis and allows to identify how changes in the conditions under which US–China trade is conducted affect the value contributed by different countries and to what extent. I find that US integration within GVCs contracts whereas China increases its participation mainly as a seller to global networks. The EU countries strengthen their linkages with the US and EU regional integration increases as a consequence of the tariff war between the US and China.