If the United States imposed customs tariffs on all imports from China and the euro zone, would China or the euro zone suffer most?
Let us assume that the United States go es a very long way in its protectionism and imposes customs tariffs on all US imports from China and the euro zone. In that case, would China or the euro zone suffer most? The answer to this question depends above all on the country's growth model: the more a country's growth is driven by exports and not domestic demand, the more it will suffer from the US customs tariffs. It also depends on the type of products exported: the more it is differentiated, and the higher the level of sophistication, the less exports will suffer from the customs tariffs. This shows that: China has a growth which depends mainly on domestic demand, but a low level of product sophistication; Conversely, the euro zone has a growth that is export-driven, but with a high level of product sophistication. China and the euro zone would both suffer from massive US protectionism, but for different reasons.