Working Paper: NBER ID: w29562
Authors: Pablo Fajgelbaum; Pinelopi K. Goldberg; Patrick J. 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 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.
Keywords: US-China trade war; global reallocations; tariff elasticities; export growth
JEL Codes: F10; F12; F14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| US-China trade war (F19) | net export opportunities for bystander countries (F69) |
| downward-sloping supply curves (J20) | benefitted more from the trade war (F19) |
| average country (O51) | increased global exports in targeted products (F10) |
| countries with downward-sloping supply curves (F16) | substituted for Chinese goods in the US market (F19) |
| average country (O51) | neither complements nor substitutes China (F59) |
| Vietnam and Mexico (N66) | significant beneficiaries of trade war (F19) |
| tariff changes (F13) | export responses (Y10) |