Supply chain linkages and financial markets: Evaluating the costs of the US-China trade war

a column by Yi Huang, Chen Lin, Sibo Liu, Heiwai Tang for VOX: CEPR’s Policy Portal

Recent studies have found that US tariffs on China have led to a significant welfare loss and significant increases in consumer prices in the US.

This column, taken from a recent Vox eBook, studies firms’ equity market responses to the various tariff announcements by the US and Chinese governments in 2018 and 2019. The responses demonstrate that the structure of US–China trade is much more complex than the simplistic view of global trade that prompted the trade war, and that the winners and losers in the war depend on firms’ positioning in, and exposure to, the global value chains shared by the two countries.

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