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Historical military conflict, current trade tensions, and global supply chains

Author

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  • Hu, Yichuan
  • Li, Chang
  • Lin, Shu

Abstract

We study how two significant conflicts between China and the U.S.—the Korean War and the current trade war—affect global supply chains. Using hand-collected data, we find that the death toll from the Korean War in a chairperson's city of origin strongly influences Chinese firms' selection of U.S. suppliers today. Moreover, the current trade tensions reactivate memories of wartime trauma, significantly amplifying their negative effects. We identify two key mechanisms driving this change: Chinese retaliatory tariffs and increased media coverage of the Korean War within China. A variety of empirical tests suggest that our findings are causal and are not a result of U.S. suppliers' choice.

Suggested Citation

  • Hu, Yichuan & Li, Chang & Lin, Shu, 2026. "Historical military conflict, current trade tensions, and global supply chains," Journal of International Economics, Elsevier, vol. 160(C).
    • Handle: RePEc:eee:inecon:v:160:y:2026:i:c:s0022199626000115
    DOI: 10.1016/j.jinteco.2026.104221
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    Keywords

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    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
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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