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The impact of US tariffs against China on US imports: evidence for trade diversion?

Author

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  • Cigna, Simone
  • Meinen, Philipp
  • Schulte, Patrick
  • Steinhoff, Nils

Abstract

In this paper we provide evidence on the existence of short-run trade diversion effects towards third countries as a consequence of tariff shocks. We exploit sudden policy changes in the context of the trade dispute between the US and China. Based on a data set covering monthly product-level information on US imports from 30 countries for the period January 2016 until May 2019, we employ a difference-in-differences estimation framework. Doing so, we (1) can confirm previous findings showing a strong negative direct effect of US tariffs on US imports from China, but (2) do not find evidence for significant short-run trade diversion effects towards third countries. This latter finding holds for product and country subgroups as well as for a variety of robustness checks. JEL Classification: F13, F14, F61

Suggested Citation

  • Cigna, Simone & Meinen, Philipp & Schulte, Patrick & Steinhoff, Nils, 2020. "The impact of US tariffs against China on US imports: evidence for trade diversion?," Working Paper Series 2503, European Central Bank.
  • Handle: RePEc:ecb:ecbwps:20202503
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    Cited by:

    1. HAYAKAWA, Kazunobu & SUDSAWASD, Sasatra, 2024. "Trade Effects of the US–China Trade War on a Third Country: Preventing Trade Rerouting from China," IDE Discussion Papers 916, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    2. Chen, Sijia & Steinbach, Sandro, 2020. "Measuring the Impact of Sunset Reviews on Agricultural and Food Trade," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304566, Agricultural and Applied Economics Association.
    3. Hayakawa, Kazunobu & Ito, Keiko & Fukao, Kyoji & Ivan, Deseatnicov, 2022. "The impact of the U.S.-China conflict and the strengthening of export controls on Japanese exports," IDE Discussion Papers 852, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    4. 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).
    5. Hayakawa,Kazunobu, 2022. "The trade impact of U.S.-China conflict in Southeast Asia," IDE Discussion Papers 873, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    6. Minkyu Son, 2022. "The global propagation of the US–China trade war," Empirical Economics, Springer, vol. 63(6), pages 3121-3157, December.
    7. Christian Grimme, 2020. "On Global Current Account Balances in 2019," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 73(02), pages 49-53, February.
    8. 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).
    9. Hayakawa, Kazunobu & Ito, Keiko & Fukao, Kyoji & Deseatnicov, Ivan, 2023. "The impact of the strengthening of export controls on Japanese exports of dual-use goods," International Economics, Elsevier, vol. 174(C), pages 160-179.
    10. Korhonen, Iikka & Simola, Heli, 2024. "High-priority battlefield items and television sets: How sanctions reduced Russians' access to goods," BOFIT Discussion Papers 3/2024, Bank of Finland Institute for Emerging Economies (BOFIT).

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    More about this item

    Keywords

    difference-in-differences; product-level data; tariffs; trade diversion; US imports;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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