TY - JOUR
T1 - Trade networks and firm value: Evidence from the U.S.-China trade war
AU - Huang, Yi
AU - Lin, Chen
AU - Liu, Sibo
AU - Tang, Heiwai
N1 - Funding Information:
We thank the editor, Jonathan Vogel, two anonymous reviewers, Richard Baldwin, Ben Charoenwong, Davin Chor, Peng Lin, Amit Khandelwal, Robert Koopman, Samuel Kortum, Wenlan Qian, Mark Rosenzweig, Julien Sauvagnat, Jiao Shi, Alexander Wagner, Pengfei Wang, Michael Weber, Shang-Jin Wei, Wei Xiong, Yifan Zhang, and Xiaodong Zhu; the participants at the Asia Pacific Trade Seminars 2019 and the Bank of Canada–Tsinghua PBCSF–University of Toronto Conference on the Chinese Economy; and members of the China Securities Regulatory Commission (CSRC), the China Institute of Finance and Capital Markets, the Graduate Institute of Geneva, the HSBC School of Business of Peking University, Jinan University, Lingnan University, the LSE-Tsinghua Workshop, the NBER Chinese Economy Workshop, Southwest University of Finance and Economics, the International Monetary Fund, the University of Notre Dame, and the WTO-Geneva Trade and Development Workshop for their Lin acknowledges the financial support from the Major Program of the National Science Foundation of China (72192841). Liu acknowledges the financial support from the Research Grants Council of Hong Kong Early Career Scheme (23601319).
Publisher Copyright:
© 2023 Elsevier B.V.
PY - 2023/11
Y1 - 2023/11
N2 - 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.
AB - 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.
KW - Event study
KW - Firm value
KW - Global value chains
KW - Offshoring
KW - Trade policy
UR - https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3504602
UR - https://cepr.org/publications/dp14173
UR - http://www.scopus.com/inward/record.url?scp=85171806244&partnerID=8YFLogxK
U2 - 10.1016/j.jinteco.2023.103811
DO - 10.1016/j.jinteco.2023.103811
M3 - Journal article
SN - 0022-1996
VL - 145
JO - Journal of International Economics
JF - Journal of International Economics
M1 - 103811
ER -
