(Bloomberg) --
The laws of physics tell us that the strength of the gravitational force between two objects depends on two things: mass and distance. This principle has an economic application as well -- the amount of trade between two economies depends on their size and proximity. Controlling for these helps isolate the long-run effects of new EU trade pacts, Brexit and even U.S. tariffs. Bloomberg Economics estimates that EU trade deals currently under negotiation could permanently create $80 billion of annual exports. Trade wars, and Britain's divorce from the EU could permanently destroy as much as $500 billion.
©2019 Bloomberg L.P.
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