Trade networks and firm value: Evidence from the U.S.-China trade war

Yi Huang, Chen Lin, Sibo Liu, Heiwai Tang*

*Corresponding author for this work

Research output: Contribution to journalJournal articlepeer-review

3 Citations (Scopus)


We study the financial implications of the 2018–2019 U.S.-China trade war for global supply chains. Around the dates when higher tariffs are announced, U.S. firms that depend more on exports to and imports from China experience larger declines in market value, with the negative effect spilling over to the affected firms' suppliers and customers through production networks. The trade war effect is mainly concentrated among U.S. firms that sell to Chinese customers with low R&D intensity or outsource to Chinese differentiated input suppliers. We also exploit the within-firm variation in tariff exposure according to the detailed product lists and conduct a reverse experiment based on the 2019 trade talks. To explain the findings, we propose a theoretical model that highlights how complex trade structures shape shareholder wealth.
Original languageEnglish
Article number103811
Number of pages41
JournalJournal of International Economics
Early online date25 Aug 2023
Publication statusPublished - Nov 2023

Scopus Subject Areas

  • Economics and Econometrics
  • Finance

User-Defined Keywords

  • Event study
  • Firm value
  • Global value chains
  • Offshoring
  • Trade policy


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