The U.S.–China Trade War and the Geography of Global Production

Harald Fadinger, Lei Li, Sophia Praetorius and Jan Schymik

No 12942, CESifo Working Paper Series from CESifo

Abstract: We study how the U.S.–China trade war affected manufacturing activity in third countries using a novel plant-level dataset covering millions of establishments in 50 major economies, including affiliates of more than 200,000 multinational enterprises (MNEs). Combining establishment-level data with detailed tariff information, we estimate the effects of U.S. and Chinese punitive bilateral output and input tariffs on sales, employment, and establishments across countries, industries, and stages of production. We find that third-country effects of the trade war are highly heterogeneous and largely offsetting, yielding moderately negative net effects overall. Most of the adjustment is driven by multinational enterprises reallocating activity across affiliate networks, while domestic firms respond much less.

Keywords: global value chains; firm location choice; multinational enterprise; trade policy; tariffs; tariff elasticity; upstreamness; downstreamness; output tariffs; input tariffs; third-country effects of trade policy (search for similar items in EconPapers)
JEL-codes: F13 F14 F23 (search for similar items in EconPapers)
Date: 2026
New Economics Papers: this item is included in nep-bec and nep-iaf
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.ifo.de/DocDL/cesifo1_wp12942.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_12942

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().