The US-China Trade War and Global Reallocations
We study global trade responses to the US-China trade war. We estimate the tariff impacts on product-level exports to the US, China, and rest of world. On average, countries decreased exports to China and increased exports to the US and rest of world. Most countries export products that complement the US and substitute China, and a subset operate along downward-sloping supplies. Heterogeneity in responses, rather than specialization, drives export variation across countries. Surprisingly, global trade increased in the products targeted by tariffs. Thus, despite ending the trend towards tariff reductions, the trade war did not halt global trade growth.
Maximilian Schwarz provided excellent research assistance. E-mail: email@example.com, firstname.lastname@example.org, email@example.com, firstname.lastname@example.org, email@example.com. We thank Veronica Rappaport and Irene Brambilla for their conference discussions of the paper; Juan Carlos Hallak and Ahmad Lashkaripour for helpful comments; and seminar participants at Australasian Meeting of the Econometric Society, 2021 ERWIT, Bank of Portugal, Barcelona Summer Workshop, CEU Vienna, China Meeting of Econometric Society, Federal Reserve Board, HKU, Harvard/MIT, Indiana, LACEA/LAMES, LACEA TIGN, NBER ITI, Penn State, Princeton, UCSD, and SMU for comments. Patrick J. Kennedy acknowledges financial research support from the National Science Foundation Graduate Research Fellowship program. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.