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

Jiafeng Pan, Te Du and Chao Fang

Economics Letters, 2024, vol. 244, issue C

Abstract: Many studies have shown that the US-China trade war has harmed China's exports and economy. This paper analyzes whether local governments respond to US 301 tariffs through public spending. Using the variation of tariff exposure across cities, this paper finds that the tariff shock led local governments to increase public spending, mainly on social security and employment. Heterogeneity analysis indicates this effect was more pronounced in cities with higher openness, lower fiscal pressure, and lower saving levels. Robustness tests are provided.

Keywords: The US-China trade war; Section 301 tariffs; Government spending; Social security and employment (search for similar items in EconPapers)
JEL-codes: F14 F60 H75 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:244:y:2024:i:c:s0165176524005147

DOI: 10.1016/j.econlet.2024.112030

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