Working Paper: NBER ID: w31602
Authors: Kyle Handley; Fariha Kamal; Ryan Monarch
Abstract: We use the 2018-2019 U.S. trade war to examine how supply chains adjustments to a tariff cost shock affect imports and exports. Using confidential firm-trade linked data, we show that the decline in imports of tariffed goods was driven by discontinuations of U.S. buyer–foreign supplier relationships, reduced formation of new relationships, and exits by U.S. firms from import markets altogether. However, tariffed products where imports were concentrated in fewer suppliers had a smaller decline in import growth. We then construct measures of export exposure to import tariffs by linking tariffs paid by importing firms to their exported products. We find that the most exposed products had lower exports in 2018-2019, with most of the impact occurring in 2019.
Keywords: No keywords provided
JEL Codes: F1; F13; F14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Decline in imports of tariffed goods (F14) | Discontinuation of U.S. buyer-foreign supplier relationships (L14) |
| Discontinuation of U.S. buyer-foreign supplier relationships (L14) | Decline in imports of tariffed goods (F14) |
| Fewer new relationships formed (J12) | Discontinuation of U.S. buyer-foreign supplier relationships (L14) |
| Some U.S. firms exited import markets (L19) | Decline in imports of tariffed goods (F14) |
| Supplier concentration (L14) | Import resilience (G52) |
| Tariff exposure (F31) | Reduced export levels (F14) |
| Supply chain production frictions for exporters (F14) | Equivalent to an ad valorem tariff of about 2% on U.S. exports (F14) |