IDEAS home Printed from https://ideas.repec.org/a/eee/ecmode/v157y2026ics0264999326000416.html

The collateral damage of U.S. sanctions: Evidence from Chinese peer firms during the trade war

Author

Listed:
  • Wu, Xihao
  • Zhang, Di
  • Sun, Yani

Abstract

The U.S.–China trade war has significantly impacted global economic relations, yet its spillover effects on non-targeted firms remain underexplored. Using U.S. sanctions since 2018 as an exogenous shock, this study investigates the spillover effects on Chinese peer firms. Results show that these sanctions reduced the average net profit margin of Chinese peer firms by 3.69 %, with stronger spillovers in sectors more connected to U.S. businesses, those exporting more to TTIP countries before the trade war, and those facing heavier sanctions. Additionally, peer firms cut investment by 0.64%, increased layoffs by 8.36%, and raised R&D spending by 41.42%. These findings deepen our understanding of trade war spillovers and offer guidance for designing resilient trade policies in an uncertain global environment.

Suggested Citation

  • Wu, Xihao & Zhang, Di & Sun, Yani, 2026. "The collateral damage of U.S. sanctions: Evidence from Chinese peer firms during the trade war," Economic Modelling, Elsevier, vol. 157(C).
    • Handle: RePEc:eee:ecmode:v:157:y:2026:i:c:s0264999326000416
    DOI: 10.1016/j.econmod.2026.107512
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0264999326000416
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econmod.2026.107512?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecmode:v:157:y:2026:i:c:s0264999326000416. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/30411 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.