Working Paper: NBER ID: w29349
Authors: Davin Chor; Bingjing Li
Abstract: How much has the US-China tariff war impacted economic outcomes in China? We address this question using high-frequency night lights data, together with measures of the trade exposure of fine grid locations constructed from Chinese firms' geo-coordinates. Exploiting within-grid variation over time and controlling extensively for grid-specific contemporaneous trends, we find that each 1 percentage point increase in exposure to the US tariffs was associated with a 0.59% reduction in night-time luminosity. We combine these with structural elasticities that relate night lights to economic outcomes, motivated by the statistical framework of Henderson et al. (2012). The negative impact of the tariff war was highly skewed across locations: While grids with negligible direct exposure to the US tariffs accounted for up to 70% of China's population, we infer that the 2.5% of the population in grids with the largest US tariff shocks saw a 2.52% (1.62%) decrease in income per capita (manufacturing employment) relative to unaffected grids. By contrast, we do not find significant effects from China's retaliatory tariffs.
Keywords: No keywords provided
JEL Codes: E01; F10; F13; F14; F16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| US tariffs (F19) | export demand (F10) |
| exposure to US tariffs (F69) | nighttime luminosity (Y91) |
| largest US tariff shocks (N12) | income per capita (D31) |
| largest US tariff shocks (N12) | manufacturing employment (L60) |
| US tariffs (F19) | economic activity (E20) |
| retaliatory tariffs (F13) | economic activity (E20) |