Industrial Policy and Effective Availability in Strategic Supply Chains: Empirical Evidence from Semiconductor Trade

Savannah Yu and Alexander Yu

Applied Economics and Finance, 2026, vol. 13, issue 1, 41-52

Abstract: Strategic supply chains have become a central concern for economic policy as geopolitical fragmentation, export controls, and industrial subsidies reshape global trade. This study evaluates how recent U.S. trade and industrial policies have affected the effective availability of semiconductor inputs—a critical determinant of productivity, innovation, and economic resilience. Using detailed bilateral trade data from UN Comtrade (2020–2024), the paper constructs a CES-based import aggregator that adjusts observed trade flows for tariffs, export controls, and geopolitical risk. The empirical results show that while nominal semiconductor imports recovered after the pandemic, policy-adjusted effective availability experienced significant volatility following the introduction of import controls and targeted tariffs. Dependence on East Asian suppliers—particularly Japan, South Korea, and the Netherlands—remains structurally high, especially for advanced equipment and lithography inputs. However, diversification toward allied and regional partners partially offset policy-induced access constraints by 2024. The findings highlight three applied insights. First, industrial policy can stabilize supply access without full reshoring when substitution elasticities are sufficiently high. Second, targeted restrictions impose short-run costs on effective availability but may accelerate long-run diversification. Third, resilience depends more on supplier substitutability and policy coordination than on import volume alone. These results inform ongoing debates on industrial policy effectiveness, strategic trade management, and supply-chain resilience in advanced and emerging economies.

Date: 2026
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