Throwing sand in the chips: unintended effects of export controls

Export controls play a prominent role in the ongoing technological race between the United States and China. This study investigates the short-term direct effects of US export controls on US exports as well as the indirect effects of these measures on the exports of third countries. We collect data on unilateral US measures targeting all exports to China of specific products in the semiconductor production chain, and merge it with monthly trade data on exports of the same products from countries participating to the production chain. First, we find a negative direct effect on US exports of chips. Second, results show positive, significant, effects on the exports of equipment for the manufacturing of semiconductors from the EU, Japan, and Singapore. This evidence is not only suggestive of a limited indirect enforcement of US policies on foreign jurisdictions, but also of the unintended effects such a unilateral policy can trigger.