Quantitative Analysis of the Trade and Economic Effects of X Country's Reciprocal Tariff Policy Based on a Combined Forecasting Model

Abstract

This paper systematically analyzes the heterogeneous impacts of X Country's reciprocal tariff measures on global trade patterns and regional economic operations by addressing five core research questions.

Firstly, based on the Rotterdam model, it quantitatively estimates the import demand elasticity of A Country's soybeans sourced from three major exporting countries against the backdrop of X Country's tariff adjustments, and employs the grey forecasting model to dynamically simulate and forecast the changing trends of soybean export volume and trade value under fluctuating tariff regimes.

Secondly, this study establishes a log-linear import demand function to empirically measure the market competitiveness of J Country’s automobile manufacturers in the X Country's consumer market, and develops a targeted policy transmission mechanism model to dissect the multidimensional effects of tariffs on bilateral automotive trade flows, import commodity structure adjustment and domestic industrial operation, further verifying that long-term tariff barriers will curb independent innovation capacity and weaken the global competitive edge of domestic manufacturing.

Thirdly, utilizing the classic Armington model, Sino-X semiconductor trade commodities are categorized into high-end, mid-range and low-end segments to measure the variations of import share and weight after tariff escalation, which objectively reflects the unique supply and demand structure and import dependence of Y’s semiconductor industry.

Fourthly, a multi-scenario simulation framework is constructed to quantify the fluctuation range of X Country's tariff revenue and predict its net adjustment scale, with relevant calculations showing that the cumulative tariff revenue of X Country in the next five years will reach $353.98 billion.

Finally, selecting six representative macroeconomic indicators and adopting ridge regression to eliminate multicollinearity interference, the paper evaluates and predicts the medium and long-term economic negative shocks triggered by tariff policies, covering real GDP contraction, sustained CPI elevation and continuous deterioration of the unemployment rate.