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The US-China Trade War and Global Reallocations

Author

Listed:
  • Pablo Fajgelbaum
  • Pinelopi Goldberg
  • Patrick Kennedy
  • Amit Khandelwal
  • Daria Taglioni
Abstract
The US-China trade war created net export opportunities rather than simply shifting trade across destinations. Many "bystander" countries grew their exports of taxed products into the rest of the world (excluding the United States and China). Country-specific components of tariff elasticities, rather than specialization patterns, drove large cross-country variation in export growth of tariff-exposed products. The elasticities of exports to US-Chinese tariffs identify whether a country's exports complement or substitute the United States or China and its supply curve's slope. Countries that operate along downward-sloping supplies whose exports substitute (complement) the United States and China are among the larger (smaller) beneficiaries of the trade war.

Suggested Citation

  • Pablo Fajgelbaum & Pinelopi Goldberg & Patrick Kennedy & Amit Khandelwal & Daria Taglioni, 2024. "The US-China Trade War and Global Reallocations," American Economic Review: Insights, American Economic Association, vol. 6(2), pages 295-312, June.
    • Handle: RePEc:aea:aerins:v:6:y:2024:i:2:p:295-312
    DOI: 10.1257/aeri.20230094
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    Cited by:

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    2. Eichengreen, Barry, 2023. "Globalization: Uncoupled or unhinged?," Journal of Policy Modeling, Elsevier, vol. 45(4), pages 685-692.
    3. Afontsev, S., 2022. "Political paradoxes of economic sanctions," Journal of the New Economic Association, New Economic Association, vol. 55(3), pages 193-198.
    4. 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.
    5. 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.
    6. 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.
    7. Steinbach, Sandro, 2022. "Port congestion, container shortages, and U.S. foreign trade," Economics Letters, Elsevier, vol. 213(C).
    8. Ciani, Andrea & Mau, Karsten, 2023. "Delivery times in international competition: An empirical investigation," Journal of Development Economics, Elsevier, vol. 161(C).
    9. 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).
    10. 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).
    11. 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.
    12. 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).
    13. 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.
    14. 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.
    15. 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.
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    17. 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.

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    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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