Ripple effects in regional value chains: Evidence from an episode of the US–China trade war

This study empirically examines the ripple effect of demand shocks on upstream suppliers in regional value chains. Specifically, we investigate how changes in US imports from China alter China's imports of intermediate inputs in machinery industries from Japan, South Korea and Taiwan. The analy...

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Bibliographic Details
Published in:World economy 2024-03, Vol.47 (3), p.880-897
Main Authors: Hayakawa, Kazunobu, Pyun, Ju Hyun, Yamashita, Nobuaki, Yang, Chih‐hai
Format: Article
Language:English
Subjects:
Economic analysis
Exports
global value chains
Imports
Machinery
Machinery industry
Multinational corporations
regional value chains
Regions
Trump tariffs
US–China trade war
Value chain
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Summary:This study empirically examines the ripple effect of demand shocks on upstream suppliers in regional value chains. Specifically, we investigate how changes in US imports from China alter China's imports of intermediate inputs in machinery industries from Japan, South Korea and Taiwan. The analysis of China's monthly imports from the three supplier economies during 2018–2019 finds that the decrease in China's output exports to the US caused by the Trump tariffs reduced China's input imports from supplier economies. Also, this adverse ripple effect was the most significant in Taiwan, where multinational enterprises use China as an export platform.
ISSN:0378-5920
1467-9701
DOI:10.1111/twec.13444