U.S.‐China Trade Tensions and Their Supply Chain Relationships: Evidence From U.S. Listed Firms

Based on the data of U.S. listed firms from 2015 to 2021, this paper uses a difference‐in‐differences model to empirically investigate the impact of the 2018 U.S.‐China trade tensions on the supply chain arrangements of U.S. firms with China. The baseline estimation results indicate that after the trade tensions, U.S. firms have reduced their supply chain dependence on China. The results of the mechanism analyses imply that based on an implicit policy logic of “more imports, more restrictions,” the U.S. has restrained the supply chains related to China through raising import tariffs, expanding export controls, and strengthening supply chain reviews. The results of heterogeneity analyses find that U.S. firms in high‐tech industries, those with specific supply chain relationships, and those with weak market power have significantly reduced their dependence on China. The results of extended analyses reveal that after the occurrence of the trade tensions, the supply chain arrangements of U.S. firms have shown a trend of “China plus N” and “prioritizing near‐shoring and friend‐shoring.” There is a “de‐risking” trend in U.S. supply chain arrangements with China, even though they have not yet developed into a “decoupling” state.