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Trade war from the Chinese trenches

Author

Listed:
  • Liu, Nan
Abstract
From 2018 through 2019, the United States and China imposed a series of wide-ranging increases in import tariffs which have dramatically raised trade barriers between the two largest economies in the world. With a focus on the import side, this paper provides evidence on the impact of the trade war on China's trade quantities and prices, and estimates related trade elasticities. Both Chinese import quantities and values dropped sharply following the tariffs and there is evidence for incomplete pass-through of Chinese import tariffs in the very short run. More importantly, this paper shows that while China's non-processing imports declined dramatically during the trade war, the processing imports almost remain un-affected. The results suggest that the Chinese special duty-free policy on processing trade may have served as a built-in mechanism to better protect domestic firms from the damage of the trade war through the global value chain channel.

Suggested Citation

  • Liu, Nan, 2020. "Trade war from the Chinese trenches," MPRA Paper 103929, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:103929
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Trade war; Tariff; China; Processing trade; Global value chain;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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