The US-China Trade War and Global Reallocations
Working Paper 29562
DOI 10.3386/w29562
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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 US 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-China tariffs identify whether a country’s exports complement or substitute US or China and its supply curve’s slope. Countries that operate along downward-sloping supplies whose exports substitute (complement) US and China are among the larger (smaller) beneficiaries of the trade war.
Non-Technical Summaries
- Upending a decades-long effort to reduce global trade barriers, China and the United States began mutually escalating tariffs on $450...