IDEAS home Printed from https://ideas.repec.org/a/eee/ecolet/v244y2024ics0165176524004932.html
   My bibliography  Save this article

Supply chain adjustments to tariff shocks: Evidence from firm trade linkages in the 2018-2019 U.S. trade war

Author

Listed:
  • Handley, Kyle
  • Kamal, Fariha
  • Monarch, Ryan

Abstract

We use the 2018-2019 U.S. trade war to examine how supply chains adjustments to a tariff cost shock affect imports. Using confidential trade data, we show that the decline in U.S. imports of tariffed goods during the trade war was driven primarily by the exit of firms from import markets, discontinued buyer–supplier relationships, and reduced entry into importing. However, tariffed products where imports were concentrated in fewer suppliers exhibited smaller declines in import growth.

Suggested Citation

  • Handley, Kyle & Kamal, Fariha & Monarch, Ryan, 2024. "Supply chain adjustments to tariff shocks: Evidence from firm trade linkages in the 2018-2019 U.S. trade war," Economics Letters, Elsevier, vol. 244(C).
    • Handle: RePEc:eee:ecolet:v:244:y:2024:i:c:s0165176524004932
    DOI: 10.1016/j.econlet.2024.112009
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165176524004932
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econlet.2024.112009?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 look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Kyle Handley & Fariha Kamal & Ryan Monarch, 2020. "Rising Import Tariffs, Falling Export Growth: When Modern Supply Chains Meet Old-Style Protectionism," Working Papers 676, Research Seminar in International Economics, University of Michigan.
    2. Feenstra, Robert C. & Jensen, J. Bradford, 2012. "Evaluating estimates of materials offshoring from US manufacturing," Economics Letters, Elsevier, vol. 117(1), pages 170-173.
    3. Mary Amiti & Stephen J. Redding & David E. Weinstein, 2019. "The impact of the 2018 trade war on US prices and welfare," CentrePiece - The magazine for economic performance 553, Centre for Economic Performance, LSE.
    4. Pablo D Fajgelbaum & Pinelopi K Goldberg & Patrick J Kennedy & Amit K Khandelwal, 2020. "The Return to Protectionism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(1), pages 1-55.
    5. Michael E. Waugh, 2019. "The Consumption Response to Trade Shocks: Evidence from the US-China Trade War," NBER Working Papers 26353, National Bureau of Economic Research, Inc.
    6. Fariha Kamal & Wei Ouyang, 2020. "Identifying U.S. Merchandise Traders: Integrating Customs Transactions with Business Administrative Data," Working Papers 20-28, Center for Economic Studies, U.S. Census Bureau.
    7. Mike Waugh, 2019. "The Consumption Response to Trade Shocks," 2019 Meeting Papers 1226, Society for Economic Dynamics.
    8. Hummels, David & Ishii, Jun & Yi, Kei-Mu, 2001. "The nature and growth of vertical specialization in world trade," Journal of International Economics, Elsevier, vol. 54(1), pages 75-96, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Freund, Caroline & Mattoo, Aaditya & Mulabdic, Alen & Ruta, Michele, 2024. "Is US trade policy reshaping global supply chains?," Journal of International Economics, Elsevier, vol. 152(C).
    2. Monarch, Ryan & Schmidt-Eisenlohr, Tim, 2023. "Longevity and the value of trade relationships," Journal of International Economics, Elsevier, vol. 145(C).
    3. Oh, Saera & Lim, Sunghun, 2024. "Geopolitical Risks and Agricultural Trade Diversification in Southern Africa: Port-level Evidence from the Russia-UkraineWar," 2024 Annual Meeting, July 28-30, New Orleans, LA 343735, Agricultural and Applied Economics Association.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Blanchard, Emily J. & Bown, Chad P. & Chor, Davin, 2024. "Did Trump’s trade war impact the 2018 election?," Journal of International Economics, Elsevier, vol. 148(C).
    2. Sanyal, Anirban, 2023. "Caught in the Crossfire: How Trade Policy Uncertainty Impacts Global Trade," EconStor Preprints 272825, ZBW - Leibniz Information Centre for Economics.
    3. Kyle Handley & Fariha Kamal & Ryan Monarch, 2020. "Rising Import Tariffs, Falling Export Growth: When Modern Supply Chains Meet Old-Style Protectionism," Working Papers 676, Research Seminar in International Economics, University of Michigan.
    4. Bown, Chad P., 2021. "The US–China trade war and Phase One agreement," Journal of Policy Modeling, Elsevier, vol. 43(4), pages 805-843.
    5. Pablo Fajgelbaum & Pinelopi Goldberg & Patrick Kennedy & Amit Khandelwal & Daria Taglioni, 2024. "The US-China Trade War and Global Reallocations," American Economic Review: Insights, American Economic Association, vol. 6(2), pages 295-312, June.
    6. Cecilia Bellora & Lionel Fontagné, 2019. "Shooting Oneself in the Foot? Trade War and Global Value Chains," Working Papers 2019-18, CEPII research center.
    7. He, Chuan & Mau, Karsten & Xu, Mingzhi, 2021. "Trade Shocks and Firms Hiring Decisions:," Research Memorandum 001, Maastricht University, Graduate School of Business and Economics (GSBE).
    8. Karin Mayr-Dorn & Gaia Narciso & Duc Anh Dang & Hien Phan, 2023. "Trade diversion and labor market adjustment: Vietnam and the U.S.-China trade war," Economics working papers 2023-04, Department of Economics, Johannes Kepler University Linz, Austria.
    9. He, Chuan & Mau, Karsten & Xu, Mingzhi, 2021. "Trade Shocks and Firms Hiring Decisions: Evidence from Vacancy Postings of Chinese Firms in the Trade War," Labour Economics, Elsevier, vol. 71(C).
    10. Ma, Hong & Ning, Jingxin & Xu, Mingzhi (Jimmy), 2021. "An eye for an eye? The trade and price effects of China's retaliatory tariffs on U.S. exports," China Economic Review, Elsevier, vol. 69(C).
    11. Benguria, Felipe & Saffie, Felipe, 2024. "Escaping the trade war: Finance and relational supply chains in the adjustment to trade policy shocks," Journal of International Economics, Elsevier, vol. 152(C).
    12. Sanyal, Anirban, 2021. "Impact of US-China Trade War on Indian External Trade," EconStor Preprints 242250, ZBW - Leibniz Information Centre for Economics.
    13. Cecilia Bellora & Lionel Fontagné, 2019. "Shooting Oneself in the Foot? Trade War and Global Value Chains," Working Papers 2019-18, CEPII research center.
    14. James Lake & Jun Nie, 2022. "The 2020 US Presidential Election and Trump's Trade War," CESifo Working Paper Series 9669, CESifo.
    15. Haoyuan Ding & Bo Pu & Tong Qi & Kai Wang, 2022. "Valuation effects of the US–China trade war: The effects of foreign managers and foreign exposure," Journal of Economic Surveys, Wiley Blackwell, vol. 36(3), pages 662-683, July.
    16. Ricardo Correa & Julian di Giovanni & Linda S. Goldberg & Camelia Minoiu, 2023. "Trade Uncertainty and U.S. Bank Lending," International Finance Discussion Papers 1383, Board of Governors of the Federal Reserve System (U.S.).
    17. Huang, Yi & Lin, Chen & Liu, Sibo & Tang, Heiwai, 2023. "Trade networks and firm value: Evidence from the U.S.-China trade war," Journal of International Economics, Elsevier, vol. 145(C).
    18. Bekkers, Eddy & Schroeter, Sofia, 2020. "An economic analysis of the US-China trade conflict," WTO Staff Working Papers ERSD-2020-04, World Trade Organization (WTO), Economic Research and Statistics Division.
    19. Beckmann, Joscha & Czudaj, Robert L. & Murach, Michael, 2024. "Macroeconomic effects from media coverage of the China–U.S. trade war on selected EU countries," European Journal of Political Economy, Elsevier, vol. 85(C).
    20. Guo, Guangyuan & Hu, Dongmin & Wang, Huanhuan & Zhang, Zhiqiang, 2024. "Adapting to trade friction: The supply chain dynamics of Chinese suppliers," China Economic Review, Elsevier, vol. 87(C).

    More about this item

    Keywords

    Global supply chains; Strategic products; Tariffs; Trade war;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

    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:ecolet:v:244:y:2024:i:c:s0165176524004932. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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/ecolet .

    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.