Abstract: This paper constructs a two-country dynamic stochastic general equilibrium (DSGE) model with heterogeneous enterprises to study the macroeconomic effects of the Sino-American trade war on the two countries. The conclusions are mainly as follows: Faced with a trade war against China launched by the U.S., even the trade war being promoted by raising the tariff rates, if China does not take counter-measures, China’s output value, trade balance and other macroeconomic indicators will become significantly worsen in a short to medium term, while the corresponding indicators of the U.S. will be better. If China takes basically equal counter-measures, China’s output value, trade balance and other macroeconomic indicators will be improved to a certain extent in the short to medium term, while the corresponding indicators of the U.S. will be worse. Whether China takes counter-measures or not, the levels of consumption and welfare of China’s residents will become worsen to a certain extent; when counter-measures are taken, an even worse situation can be seen in China. If China does not take counter-measures, the level of consumption and welfare of the U.S. residents will also become worsen to some extent; while China takes basically equal counter-measures, the level of consumption and welfare of the U.S. residents will become still worsen. China should firmly oppose trade war, but if the U.S. persists in launching or upgrading trade wars, China should take counter-measures determinedly, so as to force the U.S. to stop trade wars.

Key words: trade war; tariff rate; macroeconomic effect; DSGE model