Trade war from the Chinese trenches

Nan Liu

MPRA Paper from University Library of Munich, Germany

Abstract: From 2018 through 2019, the United States and China imposed a series of wide-ranging increases in import tariffs which have dramatically raised trade barriers between the two largest economies in the world. With a focus on the import side, this paper provides evidence on the impact of the trade war on China's trade quantities and prices, and estimates related trade elasticities. Both Chinese import quantities and values dropped sharply following the tariffs and there is evidence for incomplete pass-through of Chinese import tariffs in the very short run. More importantly, this paper shows that while China's non-processing imports declined dramatically during the trade war, the processing imports almost remain unaffected. The results suggest that the Chinese special duty-free policy on processing trade may have served as a built-in mechanism to better protect domestic firms from the damage of the trade war through the global value chain channel.

Keywords: Trade war; Tariff; China; Processing trade; Global value chain (search for similar items in EconPapers)
JEL-codes: F10 F13 F14 (search for similar items in EconPapers)
Date: 2020-11-03
New Economics Papers: this item is included in nep-cna and nep-int
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https://mpra.ub.uni-muenchen.de/110175/1/MPRA_paper_104074.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/110195/9/MPRA_paper_110195.pdf revised version (application/pdf)

Related works:
Working Paper: Trade war from the Chinese trenches (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:110175

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