Heterogeneous impacts of the U.S.-China trade war on Korea: What drives industry differences?

Heehyun Lim

KDI Journal of Economic Policy, 2025, vol. 47, issue 4, 73-129

Abstract: This paper analyzes how the U.S.-China trade war affected Korean industries and identifies the industry characteristics that determined which industries gained or lost. I show that heterogeneity in responses is closely linked to capital intensity and export intensity, highlighting the role of economies of scale and export readiness. Using detailed industry-level data from Korean manufacturing, the analysis finds that capital-intensive industries with substantial pre-war investments and industries with high export intensity achieved greater growth and cost reductions following the tariff shocks. These findings indicate that industries positioned to expand their scale captured the gains, while others were left behind, emphasizing the importance of targeted and differentiated policy support for pre-investment, capital deepening, and export infrastructure ultimately to enable more industries to leverage external trade disruptions as opportunities for sustained growth.

Keywords: Tariff Elasticity; Trade War; Trade Fragmentation; Third-country Effect; Economies of Scale (search for similar items in EconPapers)
JEL-codes: C33 F12 F13 F14 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/335564/1/1949890430.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:zbw:kdijep:335564

DOI: 10.23895/kdijep.2025.47.4.73

Access Statistics for this article

KDI Journal of Economic Policy is currently edited by Dongseok Kim

More articles in KDI Journal of Economic Policy from Korea Development Institute (KDI) Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().