Trade Disruptions in the Dairy Sector: Analyzing EU Exports to China under Tariff Pressure

Abstract

This study examines the economic impact of tariffs and subsidies on global trade, focusing on the dairy and automotive sectors, using a Computable General Equilibrium (CGE) Model based on the Global Trade Analysis Project (GTAP) framework. The findings reveal that Chinese tariffs on EU dairy imports led to significant export declines and production contractions in major exporting countries, such as France and Germany. At the same time, smaller exporters with niche markets, like Greece, experienced modest gains. The effects on welfare were uneven, with some EU countries achieving slight improvements and others, along with China, facing notable losses. Non-EU producers capitalized on the reduced EU presence in the Chinese market, capturing a larger market share and benefiting economically. In the automotive sector, EU tariffs on Chinese imports stimulated domestic production and trade surpluses but reduced overall welfare due to higher consumer costs and inefficiencies. China experienced substantial economic losses, reflecting its reliance on the EU as a key market. Meanwhile, other regions adapted by filling global automotive supply chain gaps. These findings illustrate the intricate consequences of protectionist measures, highlighting the need for strategic diversification, multilateral trade reforms, and adaptive policies to address global trade disruptions and mitigate inefficiencies in interconnected industries.