An Anatomy of the Great Reallocation in US Supply Chain Trade

This paper documents stylized facts about the “Great Reallocation” in US supply chain trade following the 20182019 tariff shocks and the April 2025 Liberation Day announce-ments. We find that: (i) The US has decoupled from China but not from the world overall. (ii) US imports diversified mainly among its top-20 partners, rather than expanding to new source countries. (iii) Local linear projections confirm ongoing declines in Chinas import shares, with compensating increases from Vietnam, Mexico, and Taiwan. (iv) Most of this shift occurred along the product-level intensive margin, though extensive margin adjust-ments became more pronounced for Vietnam and India from 2021-2024. (v) After a period of “wait and see”, the decline in import shares from China spread to contract-intensive and relationship-sticky goods by 2021-2024. (vi) Trade reallocation has already accelerated after Liberation Day, in favor of trade partners facing lower additional tariffs and with ge-ographically proximate supply networks. Together, these findings show that the US-China tariff shocks have unwound the US sourcing from China back to where it stood at the time of Chinas WTO accession.