The global impact of the US–China trade war: firm-level evidence

This paper documents the impact of the US–China trade war on firms worldwide. Based on data on more than five thousand listed firms in 40 countries, I establish that firms with export exposure to China have had a decline in revenue, profits and capital stocks since the trade war began. This effect is stronger in industries in which China raised tariffs on the US, suggesting that rest of the world exports to China are complements to US exports. At the same time, firms have benefited from export exposure to the US, especially in industries in which the US imposed trade war tariffs on China, implying that rest of the world exports substitute Chinese exports to the US. Supply chain linkages have also played a role: firms in Europe and the Americas in industries selling intermediate inputs to the US have had a relative decline in revenue during the trade war. These impacts have been highly heterogeneous across geographic regions as well as across firms of different sizes.