Abstract
AbstractWe provide evidence on the existence of short‐run trade diversion effects towards third countries as a consequence of tariff shocks. We exploit sudden policy changes in the context of the trade dispute between the United States and China in 2018. Based on a data set covering monthly product‐level information on US imports from 30 countries for the period 2016 until May 2019, we employ a difference‐in‐differences estimation framework. Doing so, we can show a strong negative direct effect of US tariffs on US imports from China, but do not find evidence for significant short‐run trade diversion effects towards third countries.
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