Responses of Exporters to Trade Protectionism: Inference from the U.S.-China Trade War

53 Pages Posted: 5 Oct 2021

See all articles by Lingduo Jiang

Lingduo Jiang

University of International Business and Economics

Yi Lu

Tsinghua University

Hong Song

Fudan University

Guofeng Zhang

University of International Business and Economics

Date Written: October 1, 2021

Abstract

This paper investigates how exports respond to trade protection by studying the U.S.-China trade war in 2018. Using monthly customs data in China from January 2017 to May 2019, we find that the launch of the trade war against Chinese exports by the U.S., on average, reduces Chinese total exports to the U.S. by 8.91%. Further decomposition shows that the reduction in exports is mostly explained by a decrease in quantity, with prices relatively unchanged. Meanwhile, negative trade
shocks cause export diversion to countries that are closer and have larger economies, and exports in R&D-intensive, high-skill-labor-intensive, high-labor-income-share, and upstream industries have been diverted even more. Heterogeneous analyses show that industries with comparative advantage, high export growth, large export value, and high elasticity of substitution are more responsive to trade protection.

Suggested Citation

Jiang, Lingduo and Lu, Yi and Song, Hong and Zhang, Guofeng, Responses of Exporters to Trade Protectionism: Inference from the U.S.-China Trade War (October 1, 2021). Available at SSRN: https://ssrn.com/abstract=3934109 or http://dx.doi.org/10.2139/ssrn.3934109

Lingduo Jiang

University of International Business and Economics ( email )

10 Huixindongjie, Chaoyang District
Beijing, 100029
China

Yi Lu

Tsinghua University ( email )

Beijing, 100084
China

Hong Song (Contact Author)

Fudan University ( email )

600 Guoquan Road
Shanghai, 100045
China

Guofeng Zhang

University of International Business and Economics ( email )

10 Huixindongjie, Chaoyang District
Beijing, 100029
China

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