Calibrating Bilateral Tariffs for Trade Rebalancing: A Dynamic Adjustment Model for the U.S.–China Deficit

Calibrating Bilateral Tariffs for Trade Rebalancing: A Dynamic Adjustment Model for the U.S.–China Deficit | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Calibrating Bilateral Tariffs for Trade Rebalancing: A Dynamic Adjustment Model for the U.S.–China Deficit A. Seddik Meziani This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-6550685/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract Persistent bilateral trade imbalances pose enduring challenges to global trade stability, yet most existing approaches either assume fixed tariff scenarios or rely on static simulations that lack mechanisms for deriving empirically grounded policy paths. This paper develops a forward-calibrated tariff framework aimed at compressing the U.S.–China trade deficit within a four-year policy window. The model integrates three key adjustment parameters—price elasticity of demand, substitution rigidity, and exchange rate misalignment—while incorporating institutional dampening and political feasibility constraints. Tariff rates are not assumed ex ante but endogenously derived to follow a front-loaded, exponentially declining path governed by an empirically calibrated decay function. Applied to current U.S.–China trade data, the model yields a tariff trajectory consistent with recent policy benchmarks. Results demonstrate that a phased, dynamically structured tariff strategy can meaningfully reduce the bilateral deficit—even under partial effectiveness. By linking empirical trade responsiveness with implementation constraints, the framework provides a policy-relevant alternative to static incidence studies and general equilibrium simulations, offering concrete guidance for trade rebalancing under real-world conditions. JEL Codes : F10 General; F12 Models of Trade with Imperfect Competition and Scale Economies; F14 Empirical Studies of Trade Tariff Policy U.S.–China Trade Deficit Empirical Calibration Dynamic Adjustment Substitution Rigidity Full Text Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-6550685","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":450159814,"identity":"09475c25-a9c9-49a9-b6f8-af799faa18ee","order_by":0,"name":"A. 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