Supply-Driven Shortage Shocks and U.S. Trade: Asymmetric Effects and Downside Risks

Supply disruptions and input shortages have become a central policy concern, yet their effects on trade remain poorly understood. This paper examines how supply-driven shortage shocks affect U.S. exports and imports using monthly data from 1994 to June 2025. Shortage shocks are identified from a news-based shortage index and an alternative supply-stress measure, and their dynamic effects are estimated while controlling for macro-financial conditions and trade policy uncertainty. Three results stand out. First, worsening shortages reduce exports and imports immediately, but the contraction is mostly short-lived. Second, shortage easing supports a slower but more persistent recovery in trade, with stronger medium-term effects for exports. Third, the effects are state-dependent: import responses vary more across time and regimes, and shortages generate disproportionately large trade losses when trade conditions are already weak. These findings suggest that shortage shocks are not symmetric supply disturbances and that policy should focus not only on easing bottlenecks after they emerge, but also on preventing escalation through input diversification, inventory buffers, and supply-chain resilience measures. Overall, shortages are an important source of external-sector vulnerability and a relevant target for trade and macroeconomic policy.