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The US-China Trade War and Global Reallocations

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  • Fajgelbaum,Pablo David
  • Goldberg,Pinelopi Koujianou
  • Kennedy,Patrick
  • Khandelwal,Amit Kumar
  • Taglioni,Daria

Abstract

This paper studies global trade responses to the US-China trade war. It estimates the tariffimpacts on product-level exports to the US, China, and rest of world. On average, countries decreased exports to Chinaand increased exports to the US and rest of world. Most countries export products that complement the US andsubstitute China, and a subset operate along downward-sloping supplies. Heterogeneity in responses,rather than specialization, drives export variation across countries. Surprisingly, global trade increased in theproducts targeted by tariffs. Thus, despite ending the trend towards tariff reductions, the trade war did not halt globaltrade growth.

Suggested Citation

  • Fajgelbaum,Pablo David & Goldberg,Pinelopi Koujianou & Kennedy,Patrick & Khandelwal,Amit Kumar & Taglioni,Daria, 2022. "The US-China Trade War and Global Reallocations," Policy Research Working Paper Series 9894, The World Bank.
    • Handle: RePEc:wbk:wbrwps:9894
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    1. Leona Shao-Zhi Li & Yize Liu & Jia Yuan, 2024. "The effect of the U.S.–China trade war on Chinese corporate innovation: A curse or a blessing?," Working Papers 202418, University of Macau, Faculty of Business Administration.
    2. Eichengreen, Barry, 2023. "Globalization: Uncoupled or unhinged?," Journal of Policy Modeling, Elsevier, vol. 45(4), pages 685-692.
    3. Christoph Albert & Paula Bustos & Jacopo Ponticelli, 2021. "The Effects of Climate Change on Labor and Capital Reallocation," NBER Working Papers 28995, National Bureau of Economic Research, Inc.
    4. Hâle Utar & Alfonso Cebreros Zurita & Luis Bernardo Torres Ruiz & Hale Utar, 2023. "The US-China Trade War and the Relocation of Global Value Chains to Mexico," CESifo Working Paper Series 10638, CESifo.
    5. Wei, Hao & Tu, Yue & Zhou, Peng, 2023. "Technical barriers to trade and export performance: Comparing exiting and staying firms," Economic Modelling, Elsevier, vol. 126(C).
    6. Lastauskas, Povilas & Proškutė, Aurelija & Žaldokas, Alminas, 2023. "How do firms adjust when trade stops?," Journal of Economic Behavior & Organization, Elsevier, vol. 216(C), pages 287-307.
    7. Berend Diekmann & Michael Kilpper, 2022. "Zollkrieg und Handelsabkommen zwischen den USA und China [Four Years of Tariff War and Two Years of Phase-One Agreement Between the U. S. and China — Has it Worked for the U. S.?]," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 102(3), pages 204-209, March.
    8. TAKEDA Shiro & HIGASHIDA Keisaku & YOMOGIDA Morihiro, 2024. "Evaluation of the Impacts of Trade Restrictions between China and Japan," Discussion papers 24072, Research Institute of Economy, Trade and Industry (RIETI).
    9. Holger Breinlich & Elsa Leromain & Dennis Novy & Thomas Sampson, 2021. "Import liberalization as export destruction? Evidence from the United States," CEP Discussion Papers dp1779, Centre for Economic Performance, LSE.
    10. Steinbach, Sandro, 2022. "Port congestion, container shortages, and U.S. foreign trade," Economics Letters, Elsevier, vol. 213(C).
    11. Christoph Albert & Paula Bustos & Jacopo Ponticelli, 2024. "The effects of climate change on labor and capital reallocation," Economics Working Papers 1887, Department of Economics and Business, Universitat Pompeu Fabra.
    12. Blanga-Gubbay, Michael & Rubínová, Stela, 2023. "Is the global economy fragmenting?," WTO Staff Working Papers ERSD-2023-10, World Trade Organization (WTO), Economic Research and Statistics Division.
    13. Ilkova, Ivelina & Lebastard, Laura & Serafini, Roberta, 2024. "Geopolitics and trade in the euro area and the United States: de-risking of import supplies?," Occasional Paper Series 359, European Central Bank.
    14. Afontsev, S., 2022. "Political paradoxes of economic sanctions," Journal of the New Economic Association, New Economic Association, vol. 55(3), pages 193-198.
    15. Ciani, Andrea & Mau, Karsten, 2023. "Delivery times in international competition: An empirical investigation," Journal of Development Economics, Elsevier, vol. 161(C).
    16. Fessina, Massimiliano & Zaccaria, Andrea & Cimini, Giulio & Squartini, Tiziano, 2024. "Pattern-detection in the global automotive industry: A manufacturer-supplier-product network analysis," Chaos, Solitons & Fractals, Elsevier, vol. 181(C).
    17. Shota Miki & Yoichiro Tamanyu, 2024. "On the Restructuring of Global Semiconductor Supply Chains," Bank of Japan Working Paper Series 24-E-6, Bank of Japan.

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    More about this item

    Keywords

    International Trade and Trade Rules; Armed Conflict; Transport Services; Food Security; Energy and Mining;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • P33 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid

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