THE ECONOMIC IMPACT OF TRADE BARRIERS AND PROTECTIONIST POLICIES ON DOMESTIC INDUSTRIES, CASE STUDY OF CURRENT US TARIFFS ON CHINA AND INDIA

Abstract

This study examines the economic impacts of US tariffs on China and India from 2021-2025 through two primary objectives. The first objective analyzes domestic US effects on employment and GDP growth using quarterly regression models. The second objective assesses corresponding impacts on China and India via pre/post-tariff trade data comparisons. Regression analysis of quarterly data tests hypotheses that tariffs yield no net US macroeconomic gains (H1) and impose losses on exporting nations (H2). Employing regression analysis validation across 20 quarters per country, the study reveals protectionism's asymmetric consequences. Domestic results challenge conventional free-trade theory while supporting infant industry arguments for targeted sectors. Foreign impacts confirm retaliatory trade channel dominance, with China demonstrating greater vulnerability than diversified India. Policy implications emphasize calibrated tariffs over universal protectionism, prioritizing employment-vulnerable sectors while mitigating supply chain disruptions. The findings inform strategic trade policy amid ongoing US-China-India tensions as of January 2026.