Abstract
We use the 2018-2019 U.S. trade war to examine how supply chains adjustments to a tariff cost shock affect imports. Using confidential trade data, we show that the decline in imports of tariffed goods during the trade war was driven primarily by the exit of U.S. firms from import markets, discontinued buyer–supplier relationships, and reduced entry into importing. However, tariffed products where imports were concentrated in fewer suppliers exhibited smaller declines in import growth.
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