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Brexit

Size matters: Brexiteers wrong to focus on net imports

While erecting trade barriers hurts both sides, the larger of the two economies will probably fare better

A trade deal between the UK and US may be harder to strike than Brexiteers hope
A trade deal between the UK and US may be harder to strike than Brexiteers hope Photo: Getty Images

When it comes to bilateral trade, gains and losses are distributed asymmetrically between the larger and the smaller economy. In the best of times, that would be bad news for the UK as it seeks new trade deals with the European Union and others. And these are not the best of times.

Economic theory predicts that erecting new trade barriers hurts both sides. But economic principles also suggest that the larger of the two economies is likely to lose less.

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