Tariff Wars and Trade Conflicts: Perspectives from China
Paper Session
Saturday, Jan. 3, 2026 10:15 AM - 12:15 PM (EST)
- Chair: Cheng chen, Clemson University
Firm Entry and Market Interdependence: Evidence from Anti-dumping Tariffs on Chinese Exports
Abstract
Using Chinese Customs data, we study how unilateral anti-dumping (AD) tariffs on Chinese products affect their exports to different destination countries. We first document that investigated products experience a decline in their total sales in both the countries that impose tariffs (focal countries) and those that do not (third countries). A decomposition exercise further suggests that the simultaneous declines in exports across countries are primarily driven by a reduction in the number of entrants. In contrast, individual exporters' sales decrease in the focal countries but increase in the third countries. To rationalize these facts, We develop an industry equilibrium framework based on firms' interdependent entry decisions to multiple markets. We show that the entry margin alone can generate cross-market policy spillovers and heterogeneous tariff responses consistent with the data. Finally, we calibrate our model and quantify the global impact of a unilateral tariff on trade and welfare.Incomplete Tariff Pass-through at the Firm Level: Evidence from U.S.-China Trade Dispute
Abstract
Recent studies on the U.S.-China trade dispute suggest that the increases in U.S. import tariffs were completely borne by U.S. importers. However, using firm-level data from the U.S. Census, we find that tariff pass-through is incomplete for firms that continue importing the same product from the same country. Large importers experience higher pass-through and account for a greater share of imports. Firms that import new products or source from different countries pay higher prices than those maintaining existing relationships. Thus, the observed complete pass-through in prior studies reflects import reallocation toward firms with higher pass-through or more costly new supplier relationships. To explain these patterns, we incorporate a firm-specific import price with two-sided market power into a standard importer model. We show that fixed import costs, an elastic foreign export supply, and the greater bargaining power of large U.S. importers help account for the empirical findings.Counterfactual Retaliatory Tariffs and the 2020 United States Presidential Election
Abstract
We provide a statistical framework to study the impact of counterfactual retaliatory tariffs on the 2020 United States Presidential Election. Using reduced-form estimates similar to Lake and Nie (2023) and the institutional features of the US election, we predict the national election outcome as a weighed average of the state-level outcomes. We also formulate an “optimal tariff” problem in which a government seeks tariffs that generate maximum impact on the election outcomes in another country subject to linear constraints. We provide the full analytical solution to the problem and implement it using trade statistics before the trade war and the reduced-form estimates. We find that the optimal tariffs can flip the outcome in certain states compared to the current tariffs.Discussant(s)
Chang Sun
,
University of Hong Kong
Wei Tian
,
Peking University
Cheng Chen
,
Clemson University
Chang Liu
,
Stony Brook University
JEL Classifications
- F1 - Trade
- F2 - International Factor Movements and International Business