Gains and losses from potential bilateral US-China trade retaliation

► We present simulation results of the potential effects of US-China trade retaliation. ► We use two closely related numerical general equilibrium models of world trade. ► In the endogenous trade surplus model, US and EU have welfare losses in most cases. ► In the endogenous trade surplus model, China, and the ROW have welfare gains. ► Introduction of endogenous imbalance changes the result relative to classic model.