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From trade protectionism to legal protectionism: How the Trump trade war harms US firms in China

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  • Bo, Shiyu
  • Liu, Wen

Abstract

This study examines an unintended consequence of trade protectionism on US firms resulting from ‘the Trump trade war.’ Using the universe of all civil verdicts containing one million firm-to-firm cases in China from 2014 to 2020, we employ a triple-difference approach to identify the trade war’s causal impact on judicial outcomes. Our findings reveal a significant decline in win rates for US plaintiffs suing Chinese defendants in cities more exposed to tariff shocks, while cases initiated by Chinese or non-US foreign plaintiffs remain unaffected. These results are robust to comparing highly similar cases constructed via an NLP algorithm and accounting for strategic case filing and nonrandom disclosure. Mechanism analysis indicates that our findings are driven by shifts in judges’ attitudes, primarily due to pressures from citizen rather than government capture, whereas highly professional judges serve as a buffer against it.

Suggested Citation

  • Bo, Shiyu & Liu, Wen, 2026. "From trade protectionism to legal protectionism: How the Trump trade war harms US firms in China," Journal of Development Economics, Elsevier, vol. 182(C).
    • Handle: RePEc:eee:deveco:v:182:y:2026:i:c:s0304387826001124
    DOI: 10.1016/j.jdeveco.2026.103829
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    Keywords

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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • K10 - Law and Economics - - Basic Areas of Law - - - General (Constitutional Law)
    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
    • P37 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Legal

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