The impact of the China–US trade war on firms’ financial performance—Evidence from China

Feiyun Sha and Yi Zhao

Applied Economics, 2024, vol. 56, issue 53, 6930-6933

Abstract: This study examines the impact of tariff policy on the financial performance of Chinese listed firms and the underlying mechanisms involved during the China–US trade war. Unexpectedly, our analysis using difference-in-differences estimation indicates that the financial performance of firms directly affected by the trade war is slightly better in the short-term compared to unaffected firms. We confirmed these results through robustness checks. Further investigation shows that this unintended consequence can be explained by the strategic allocation of resources to the domestic market, additional subsidies from the government, and a reduction in operating expenses. Our findings provide insight into the real effects of the tariff war on the economy at the firm level.

Date: 2024
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DOI: 10.1080/00036846.2023.2277686

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