An economywide analysis of potential impact of the new US supply chain policies

Our present work tries to explain how the recently recommended supply chain policies of the US can impact the global supply chain. We employ the GTAP model to analyze the possible short-term effects of those policies. We aggregated different regions and sectors to get a simplified view of our analysis. The major conclusion is that even if the newly recommended policies have the potential to increase the GDP growth rate, there might be a possibility of worsening the balance of trade account due to the risk of exchange rate appreciation. However, we only consider the US supply chain policies, and the policy approaches and responses of other countries to tackle the negative effects are still unknown. This analysis implies that the US heavy industry may be highly benefited from the recommended policies, but how much this effect may be positive, significant, and long-lasting is still unknown as our analysis majorly focuses on the short-term impacts. To study the long-term effects, we have to visualize our analysis through a dynamic general equilibrium model.