The study analyses a scenario of global trade fragmentation in which trade barriers prevent the exchange of certain products between two opposing blocs, one led by the United States and the other by China. Using a general equilibrium model, the research assesses the impact of these restrictions on welfare and the reorganization of global value chains.
According to the model's results, trade barriers between blocs reduce global welfare, especially in China and some Western countries more dependent on trade. Global value chains would reorganize on a more regional basis without breaking entirely. Direct trade between blocs would decline, while indirect trade through neutral countries would increase, making it more difficult to assess supply chain vulnerabilities to sourcing risks.
