US-China Trade War Research Articles

Honour versus face: a psycho-cultural approach to US-China great power politics

ABSTRACT This article presents a psycho-cultural framework for analysing US-China relations in the context of the great power competition, explaining the escalation of their rivalry and the proliferation of conflict. It emphasises the critical role of self-esteem and culture in shaping domestic and international dynamics, focusing on the interplay between honour and face as distinct expressions of self-esteem in US and Chinese societies. The study illustrates how pursuing national self-esteem drives confrontational interactions between these two powers, with the 2018–2020 US-China trade war as a prime example. Here, nationalist narratives were crafted to evoke emotional resonance with domestic audiences, intensifying the conflict beyond mere economic competition into a struggle for national self-esteem. The rise of identity politics in both countries has further exacerbated tensions, as perceived disrespect has triggered coercive responses, worsening bilateral relations.

Shock Propagation and the Geometry of International Trade: The US–China Trade Bipolarity in the Light of Network Science

What is the impact of geopolitics on the geometry of global trade? What is the key structural role that led to the emergence of the US–China trade bipolarity? Here, we study the geometry of international trade, taking into account not only the direct but also the indirect trade relations. We consider the self-weight of each country as an indicator of its intrinsic robustness to exogenous shocks. We assess the vulnerability of a country to potential demand or supply shocks based on the entropy (diversification) of its trade flows. By considering the indirect trade relations, we found that the key structural role that led to the emergence of the US–China trade bipolarity is that of the intermediary hub that acts as a “bridge” between different trade clusters. The US and China occupied key network positions of high betweenness centrality as early as 2010. As international trade was increasingly dependent on only these two intermediary trade hubs, this fact led to geopolitical tensions such as the US–China trade war. Therefore, betweenness centrality could serve as a structural indicator, forewarning of possible upcoming geopolitical tensions. The US–China trade bipolarity is also strongly present in self-weights, where a race in terms of their intrinsic robustness to exogenous shocks is more than evident. It is also interesting that the US and China are not only the top shock spreaders but also the most susceptible to shocks. However, China can act more as a shock spreader than a shock receiver, while for the USA, the opposite is true. Regarding the impact of geopolitics, we found that the Russia–Ukraine conflict forced Ukraine to diversify both its exports and imports, aiming to lower its vulnerability to possible shocks. Finally, we found that international trade is becoming increasingly oligopolistic, even when indirect trade relationships are taken into account, thus indicating that a “Deep Oligopoly” has formed.

Dose tariff exposure stimulate city crimes? Evidence from China-US trade war

Dose tariff exposure stimulate city crimes? Evidence from China-US trade war

Trade Policy Uncertainty, Entrepreneurial Confidence, and Corporate Innovation

Against the backdrop of global economic uncertainty and escalating trade protectionism, this paper reviews existing research and the timeline of the China-US trade war, while systematically organizing relevant data from Beifa Group. A combined theoretical and case study approach is adopted to explore the impact of trade policy uncertainty on entrepreneurial confidence and its subsequent effect on corporate innovation, as well as feasible methods to maintain entrepreneurial confidence in the face of fluctuating trade policies. The study shows that under policy uncertainty, entrepreneurial confidence has a significant positive impact on corporate innovation. Case analysis reveals that Beifa Group, in a high trade uncertainty environment, adopted a niche strategy to achieve differentiation, interacted with new markets to drive market-adaptive innovation, and built a digital platform to cluster industry chain enterprises, thereby maintaining entrepreneurial confidence and innovation capabilities. This research provides practical strategies for companies facing trade policy uncertainty, offering insights on how to promote corporate innovation through enhancing entrepreneurial confidence.

Capital liquidity and abnormal returns in the Taiwan stock market: The impact of the US-China trade conflict and the COVID-19 pandemic

ABSTRACT Liquidity plays a crucial role in the risks associated with capital flows. This study points out that, in addition to transaction costs that may hinder liquidity, increased external risk can also contribute to a reduction in liquidity. A slowdown in liquidity can lead to abnormal returns in the stock market, resulting in sharp increases or decreases. The research investigates the relationship between liquidity of capital flows and abnormal returns within the Taiwan stock market, with particular emphasis on the periods preceding and following the US-China trade conflict and the COVID-19 pandemic. The results reveal that both events exerted a considerable influence on the risk dynamics within Taiwan’s stock market. Specifically, during the US-China trade war, there was a notable increase in capital liquidity in Taiwan’s stock market. Conversely, the period of the COVID-19 pandemic was characterized by a decrease in liquidity. Additionally, our analysis indicates that illiquidity significantly impacts abnormal returns.

A Study on Korea’s Response to the Establishment of a New Global Value Chain After the US-China Trade War

A Study on Korea’s Response to the Establishment of a New Global Value Chain After the US-China Trade War

CONSEPTUAL MODEL ON THE ADOPTION OF CHINESE MOBILE OPERATING SYSTEM WITH ROGERS’ DIFFUSION OF INNOVATIONS THEORY AND ANIMOSITY

The Mobile Operating System (MOS) market has been dominated by the Apple's iOS and Google's Android. From the origin perspective, the MOS market is clearly dominated by the US, which can be used as a political weapon in geopolitical conflicts. During the US-China trade war, Huawei was banned from using Android. In response to the ban, Huawei introduced its own MOS, HarmonyOS. However, as of 2024, HarmonyOS remains insignificant in the MOS market. This leads to the key focus of this paper, which is to determine the factors that affect the adoption of Chinese MOS. The researchers of this paper conducted literature reviews to gather relevant variables for this case study. The findings of this paper presented a conceptual model consisting of five innovations attributes by Rogers’ Diffusion of Innovations (DOI) theory and the Animosity as a moderating variable. Five innovations attributes are hypothesised to have relationships with the intention to adopt Chinese MOS, and Animosity is hypothesised to moderate their relationships. This model can contribute to the academic theory of DOI and Animosity in the context of the MOS industry, and provide real-world implications for all Chinese MOS developers, which in return benefit the consumers themselves.

Trade shocks and household insurance decisions

ABSTRACT This paper studies adjustments in Chinese household insurance decisions exposed to the recent China-US trade war. The findings indicate that a rise in international trade costs between the US and China adversely affects the participation of Chinese households in commercial insurance. A potential mechanism for this relationship is that increased international trade costs influence household commercial insurance participation through the channels of household income levels and economic expectations.

Chinese Firms in the US–China Trade War: Decoupling through Reshoring?

Abstract This paper leverages firm-level data to examine the impact of the US–China trade war on the greenfield investment of Chinese investors. Our research yields a few interesting findings. Importantly, our longitudinal analysis of Chinese greenfield investment projects yields evidence that the tariffs have dampened overall Chinese investment. Further analyses for different world regions indicate that while the tariffs have generally had a chilling effect on Chinese investment in most world regions, they may have prompted Chinese investors to engage in “tariff-jumping” in the United States. Our analysis further shows that the trade war may have incentivized Chinese investors to increasingly invest in countries with good political ties with Beijing, presumably as a buffer against potential downturns in bilateral relations. It may also have contributed, at least in part, to a reduced willingness by Chinese state-owned enterprises to engage in overseas investment. However, we found no evidence that the tariffs have led to a perceptible shift in China's investment flows toward BRI countries. Overall, these findings help to illuminate the extent to which policies of “decoupling” may have induced shifts in Chinese investors’ investment patterns, at least in the short-run.

Putting Quantitative Models to the Test: an Application to the US-China Trade War

Abstract The primary motivation behind quantitative work in international trade and many other fields is to shed light on the economic consequences of policy changes and other shocks. To help assess and potentially strengthen the credibility of such quantitative predictions we introduce an IV-based goodness-of-fit measure that provides the basis for testing causal predictions in arbitrary general-equilibrium environments as well as for estimating the average misspecification in these predictions. As an illustration of how to use our IV-based goodness-of-fit measure in practice, we revisit the welfare consequences of the US-China trade war predicted by Fajgelbaum et al. (2020).

Trade policy uncertainty and corporate innovation —Evidence from the US-China trade war

Trade policy uncertainty and corporate innovation —Evidence from the US-China trade war

Withdraw

withdraw

Impact of the US-China Trade War on Bystander Countries

This paper evaluates the impact of US-China trade war on bystander countries (untargeted by additional tariffs) by analysis of changes in import value of 9 taxed products from China and other 11 bystanders in the US from 2018 to 2019. The paper reveal incomplete substitution of Chinese imports on average after adoption of tariffs targeting China. The difference in value between decline of imports from China and aggregated growth of imports from other 11 countries are termed the gaps. The gaps are explained in four aspects: a) supply elasticity; b) heterogeneity across countries; c) global value chain; d) increased use of domestic products. In beneficiary-level, bystanders are divided into large beneficiaries, small beneficiaries and losers. This paper provides suggestions in firm-level, product-level and country-level to help bystanders take advantage of the trade war, which involve efficient reallocation of resources and transformations. Improved positions of countries except for the US and China contribute to both global economic growth and development and multi-polarization in the world.

Review on pharmaceutical supply chain resilience: strategies for managing disruptions and ensuring continuity

The pharmaceutical supply chain is critical to ensuring the availability of life-saving medications and healthcare products. However, it is highly vulnerable to disruptions, including natural disasters, economic and political instabilities, supply chain vulnerabilities, and technological failures. This review explores strategies for enhancing resilience within the pharmaceutical supply chain, focusing on risk management, supplier diversification, inventory management, and the integration of advanced technologies such as IoT, AI, and block chain. Case studies, including the impact of the COVID-19 pandemic, natural disasters like Hurricane Maria, and geopolitical challenges like the US-China trade war, are analyzed to extract valuable lessons and strategies that proved effective in maintaining supply chain continuity. The review also looks ahead to future trends, emphasizing the importance of digital transformation, sustainability, and ethical sourcing in building a more robust and adaptable pharmaceutical supply chain. The findings underscore the need for proactive disruption management, strategic diversification, and sustainable practices to ensure the uninterrupted delivery of essential healthcare products.

Outward direct investment as a shelter from external trade policy shocks: Firm‐level investigation of the US–China trade war

AbstractThis study examines the effects of external trade policy shock from the US–China trade war on firm value. Using a merged data set of Chinese‐listed companies, our empirical results reveal that Chinese firms conducting outward direct investment in the US have significantly higher stock returns around the date of the outbreak of the trade war as compared with the lower returns of exporting firms. This indicates a sheltering effect of pre‐existing outward direct investment activities. Moreover, we find that the sheltering effect is more pronounced for production‐oriented projects, high tech industries and tariff‐targeted sectors, while it is weaker for state‐owned companies.

Can Trade Policy Uncertainty Drive Green Innovation? Empirical Evidence From the US–China Trade War

ABSTRACTChina's rapid economic growth in recent years has coincided with heightened environmental regulations and an upsurge in greenhouse gas emissions, necessitating a greater emphasis on green innovation to mitigate environmental risks. Concurrently, the US–China trade war has elevated trade policy uncertainty (TPU). This study uses the TPU surge from the trade war as a quasi‐natural experiment, employing text analysis of annual reports to assess firms' TPU perceptions. Using a difference‐in‐differences method, we find that increased TPU significantly hinders green innovation. Firms' responses vary with environmental advantages, regulation levels, and government subsidies. Mechanisms include reduced environmental investment, decreased executive attention to environmental issues, and corporate social responsibility. These findings underscore the importance of a stable trading environment for promoting green innovation.

Besides tit for tat: The effect of US 301 tariffs on Chinese local government spending

Besides tit for tat: The effect of US 301 tariffs on Chinese local government spending

The Impact of the Trade War Between China and the U.S. on the Economy of Indonesia

China-US Trade War is an International Trade situation where two of the most powerful economic country increasing their tariff for trading goods to each other. The War itself actually occur for a long time but not as escalated as of 2018 which was started by the US itself and its current President, Donald Trump. Many people concern that this war may affect the world economy development since both of the countries are being the source of trading for many countries. This paper will discuss about how The China-US Trade War can influence Indonesia Economics which will bring either opportunity or problem. Research in this paper discusses about Indonesian Economy ranging from exports, imports, exchange rates and FDI which may be affected by Trade War using Correlation Test as research methods.

Differential Economic Impacts of Chinese and American Trade Policies on Developed Versus Developing Nations

The trade conflict between the United States and China, the two largest economies in the world, has considerable implications for global economic stability and growth. This topic has been selected due to the necessity of understanding how these trade disputes impact other countries, particularly those heavily dependent on exporting goods to these major economies. The analysis aims to investigate the varied effects of the trade war on both industrialized and developing nations. An analysis is conducted to examine the differential effects of the trade war on industrialized and developing nations by studying the changes in GDP growth rates, unemployment rates, and balance of trade trends. This study examines the distinct economic effects of the China-US trade war on Germany, Canada, and Mexico, which serve as representative examples of developed and developing nations. The results emphasize the significance of customized policy measures to tackle the distinct difficulties and prospects encountered by various economies. Developed countries should prioritize efforts to reduce sluggish economic development and address unemployment in specific sectors. On the other hand, developing nations should take advantage of trade diversion benefits and strengthen their economic resilience. This study enhances the awareness of global trade dynamics and offers vital perspectives for policymakers seeking to negotiate the intricacies of international trade wars.

Spillover between investor sentiment and volatility: The role of social media

Spillover between investor sentiment and volatility: The role of social media