The COVID-19 pandemic severely impacted the global economy and challenged international cooperation on climate change mitigation. While many countries have eased pandemic restrictions, trade friction persists, leading to a critical dilemma: whether to prioritize trade cooperation or protectionism. This study addresses a significant research gap by evaluating the impact of trade friction on both global economic recovery and CO2 emissions. The increasingly complex global economy and the urgent need for climate action necessitate understanding the interplay between these factors. Past pandemics, such as the 1918 influenza pandemic and H1N1, have offered insights into the economic consequences of such events, but the COVID-19 pandemic presents unique challenges due to its global reach and impact on economic globalization and supply chains. The pandemic's impact on global value chains, a cornerstone of modern economic interconnectedness, requires investigation. Existing research shows varied results concerning the environmental impact of the pandemic, with some studies reporting reductions in greenhouse gas emissions due to decreased industrial activity and transportation, while others highlight the limited impact on global temperatures or even the rapid increase in emissions during economic recovery. The contrasting views on the pandemic's environmental effect highlight the need for a comprehensive analysis of the post-pandemic era, particularly focusing on the implications of potential trade friction.

Existing literature extensively documents the economic consequences of past pandemics, providing insights into the economic impacts of events like the 1918 influenza pandemic and H1N1. However, the COVID-19 pandemic's scale and global reach distinguish it, necessitating a unique focus on its effect on economic globalization. While studies have analyzed the global economic downturn and the number of people impacted by the pandemic, the impact on economic globalization and its interplay with climate change remain under-researched. Research on the environmental impacts, particularly concerning carbon emissions, has yielded mixed results. While reduced industrial activity and transportation initially led to decreased emissions, the subsequent economic recovery caused a rapid rebound, sometimes exceeding pre-pandemic levels. The impact of pandemic-related economic policies on emissions also remains unclear, with studies suggesting both negative and positive effects. The lack of consensus on the pandemic's environmental impact and the uncertainty surrounding the effects of trade friction on both economic recovery and climate change underscore the need for further investigation.

This study employed the Global Trade Analysis Project (GTAP) model, a computable general equilibrium (CGE) model, to simulate the impacts of different shocks—consumption reduction, production suspension, and trade friction—on global economic development and CO2 emissions. The GTAP model considers various economic entities (residents, enterprises, governments, and foreign countries) and economic activities like production, consumption, trade, and government spending. A two-level nested CES function was used for the production function, incorporating composite factor inputs and intermediate commodity inputs. The model incorporates Armington's conditions to represent the substitutability between domestically produced and imported commodities. The export module utilized a constant elasticity of transformation (CET) function to model the relationship between domestic sales and exports. The resident module defines income from labor and capital, while the enterprise module details income, savings, and investment. The government module models revenue from taxes and expenditure on commodities. Equilibrium and macro closure modules ensure the balancing of commodity, factor, and international markets. A carbon emissions module is integrated into the model, tracking emissions from production sectors and residents' consumption based on fossil fuel usage. Three scenarios (S1, S2, S3) representing low, medium, and high levels of shocks were simulated, with the S1 scenario closely matching the actual economic situation of 2020. Further simulations using three trade friction scenarios (T1, T2, T3) were conducted, representing 5%, 10%, and 15% increases in import tax intensity. The GTAP database, updated with macroeconomic data from 2019, provided the input data. Data on CO2 emissions were sourced from the PRIMAP-hist dataset, while capital stock was calculated using a dynamic recursion method. Elasticity analysis was performed to determine the relative importance of production suspension and trade friction shocks. Error analysis compared simulated values with actual 2020 GDP and CO2 emission data. The model was calibrated to data from 129 countries, aggregated into major countries and the EU region for simplification.

The GTAP model simulations revealed that the COVID-19 pandemic had varying impacts on different countries. Domestic shocks (consumption reduction and production suspension) significantly affected India, China, and the US, due to their large domestic markets and production. The US, EU, and China were most affected by combined domestic and international trade friction. Globally, CO2 emissions decreased in all scenarios, although the reduction was limited compared to the total economic decline. China's continued economic growth led to positive carbon emission growth despite a global decrease. Elasticity analysis showed higher production suspension shock elasticity in developing countries, reflecting their reliance on domestic markets. Developed countries, conversely, exhibited higher trade friction elasticity. The elasticity of production suspension's effect on CO2 emissions varied significantly across countries, with Australia showing a high elasticity likely due to its island status and the impact on its energy and resource-intensive industries. The EU showed a notably increased elasticity of production suspension on CO2 emissions from scenario S1 to S3, highlighting a complex relationship. Simulations of trade friction (T1, T2, T3) demonstrated that increased trade barriers negatively impacted global GDP. In the high-friction scenario (T3), the EU, US, and Russia suffered significant economic declines. However, higher trade friction surprisingly led to a decrease in CO2 emissions. This reduction came at the cost of substantial economic decline and is thus unsustainable. While China and India initially showed positive GDP growth in low-friction scenarios (T1) due to protectionist effects, higher trade frictions led to negative growth. The reduction in CO2 emissions under higher trade friction was much less than the decline in economic growth, indicating that protectionism negatively impacts both the global economy and environment.

The findings confirm the hypothesis that trade friction differentially affects economies and carbon emissions, hindering sustainable global development. Developed countries experience larger economic setbacks from trade friction, while the CO2 emission reductions in developing countries are disproportionately low relative to their economic losses. The results highlight the trade-off between economic growth and CO2 emission reduction. The temporary emission decrease during the pandemic did not significantly alter CO2 concentration but merely slowed the increase. While the pandemic affected the energy market leading to lower energy consumption and emissions, missed opportunities for green investment and recovery strategies using pandemic-related funding predominantly supported high-carbon production. The study underscores the need for collaboration to promote sustainable development, including accelerated low-carbon production, international trade cooperation, and coordinated climate action, especially in light of potential trade frictions.

This study demonstrates that increased trade friction negatively impacts both global economic recovery and CO2 emission reduction. Developing countries experience greater negative effects from domestic shocks, whereas developed nations are more sensitive to international trade barriers. The trade-off between economic growth and emission reduction necessitates coordinated international cooperation towards sustainable post-pandemic development and climate change mitigation. Future research could explore more nuanced scenarios incorporating diverse policy interventions and further refine the model's accuracy in simulating different country-specific responses to the pandemic and future economic shocks.

The GTAP model, while comprehensive, has limitations. The use of a static CGE model limits the ability to fully capture the dynamic interactions between the economy and climate change over time. The aggregation of countries into broader groups may mask heterogeneity within regions. The model's accuracy relies on the quality and availability of data, and potential errors in the input data could affect the simulation results. The assumptions made in the model, such as the elasticity parameters and the functional forms, could also affect the findings. Further research should consider incorporating more dynamic factors and disaggregated data for a more precise and nuanced analysis.