Reciprocal Tariffs and Systemic Trade Losses

Evidence From Korea, Japan, and the EU

Bibliographic Data

ID19223804
AuthorsNoori Park (National Assembly), Chang Hwan Choi (0000-0002-9732-7581, Dankook University)
Year2026
Publication date2026-06-15
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueAsia Pacific Viewpoint (JOURNAL)
Journal identifiersISSN: 1360-7456 • E-ISSN: 1467-8373
PublisherWiley (PUBLISHER • GB)
DOI10.1111/apv.70059
OpenAlexW7164934779
LanguageEN
References cited29

The resurgence of U.S. protectionism, the proposal of universal reciprocal tariffs targeting major trading partners, poses systemic risks to global trade that existing bilateral analyses have not fully captured. This paper examines the economic consequences of U.S. reciprocal tariff imposed simultaneously on imports from Korea, Japan and the European Union (EU). Using highly disaggregated HS‐10 bilateral trade data from the USITC (2024), we estimate trade flow responses via a Poisson Pseudo‐Maximum Likelihood (PPML) structural gravity model. Sector‐level export demand shocks are subsequently transmitted into the GTAP 11 general equilibrium framework and decomposed through OECD Trade in Value Added (TiVA) linkages to derive GDP, value‐added, and employment effects. Empirical results show that Korean exports to the U.S. decline by around 15%, with domestic value‐added losses equivalent to 0.5%~0.6% of GDP. Japan and the EU experience comparable relative contractions, with aggregate global trade falling by 1.2%~1.5% and world GDP declining by approximately 0.4%. Tariff pass‐through is near‐complete, implying that U.S. consumers bear the predominant share of the cost. Sectoral analysis reveals disproportionate exposure in automobiles, electronics, and batteries for Korea and Japan, and in machinery, pharmaceuticals, and luxury goods for the EU. This study contributes to the literature in ways that it demonstrates that reciprocal tariffs applied simultaneously to multiple major partners constrain trade diversion opportunities, producing systemic losses larger than those estimated in bilateral trade war scenarios; it provides an integrated micro‐to‐macro analytical framework linking HS‐10 product‐level elasticities to global input–output propagation, and it offers the first cross‐country empirical estimates under the 15% reciprocal tariff threshold—a scenario central to current policy debates yet understudied in the academic literature

Bilateral trade · Commercial policy · Free trade · General equilibrium theory · Reciprocal · Tariff · Trade barrier · Trade diversion · Trade war · Economic Theory and Policy · Global trade and economics · Market Dynamics and Volatility

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