Question

If you are asked to estimate the impact of the Trump tariffs on imports from China using the gravity equation. What would be the left-hand-side variable? And what would you include on the right-hand-side variable? Give your predictions on the sign of the coefficient for each variable included on the righthand-side. (positive? negative? or zero?).

Answer 1

The trump tariff on imports from China is negatively affect from the trade issues between Us and China . After effect of globalisation is lead to global flow of goods and services in the previous years but due to some conflict between these two countries United States applying high rate of tariff on the imports from China.

According gravity theory of trade the factor or variable mainly distance between the countries. If countries between large distance then the trade between lead less attract between the countries.
So the main variable is distance.
As per this question in this left hand side variable is trade conflict .that is main reason in this case that it lead to less trade attrativesness.
And the sign in the coefficient of included in right hand side is negative and left hand is positive and otucome become zero.