Protectionist policies between two countries lead to a recession in both countries in the long run, a researcher from the Bank of Canada finds.

In the paper, Yuko Imura examines the effects of three trade-restricting policies on global value chains and production. The policies she looks into are tariffs on final-good imports, tariffs on intermediate-input imports and barriers to accessing foreign markets.

While all three lead to recessions in the long run, the relative effects on the GDP of