International Economic Impact of the US Xinjiang Cotton Trade Restrictions: An Assessment Based on Global Multiregional Dynamic CGE Model

ABSTRACT While the United States has imposed trade restriction policies on Xinjiang cotton from China, few studies have examined their economic impacts. This research theoretically clarifies the mechanism through which these restrictions affect the economic system and utilizes a global multiregional, multisector dynamic computable general equilibrium model to quantitatively assess their international economic impacts. Results show that the restrictions adversely impact both the Chinese and US economic growth and welfare. Initially, China's real GDP decreased by 0.0232%–0.0629%, with social welfare deteriorating by $2433–6678 million, while the US real GDP declined by 0.0202%–0.0217%, with welfare losses of $3886–4347 million. Over time, as Chinese products are substituted in the US and European markets, China's economic losses and welfare deterioration tend to intensify, while the US situation gradually improves. The Southeast Asian countries may benefit from this trade conflict, showing some economic growth and welfare improvements. The impacts vary across Chinese industries, with the textile and apparel sectors most severely affected. This paper offers a quantitative assessment of the international macroeconomic impacts of the Xinjiang cotton trade restrictions, revealing the gains and losses across countries and providing valuable empirical evidence for understanding the economic impacts of such trade restrictions.