![]() ![]() We link publicly available information on new import tariffs to data on the operations of firms importing those products that would ultimately face tariff increases. Observations are at the country-product (HS6) level. Notes: Bars are average monthly log export growth (year-on-year) within each quarter from 2017Q1 to 2019Q4. The weakness in US export growth and the potential role for import tariffs underlines the importance quantifying supply chain spillovers.įigure 2 Average quarterly country-product export growth, 2017Q1-2019Q4 (year-on-year): Total growth and progressively excluding groups The drop in export growth extends beyond the major products and countries that were the focus of 2018-2019 trade tensions: the decline is clear even when progressively excluding (i) products that ultimately face foreign retaliatory tariffs, (ii) all remaining exports to China, Mexico, and Canada, and finally (iii) all remaining trade with Asia and Europe. As seen in Figure 2, US export growth was weak from mid-2018 through late 2019. 2020), we leverage confidential microdata on the universe of US trading firms to demonstrate that supply chain spillovers from the import tariffs dampened US export growth over 2018-2019. Product list for China Wave 3 at 10% and 25% is unchanged. Metals Wave 2 reduction reflects country exemption granted in 2019. Observations are at the country-tariff line (HS8) level. Notes: New US import tariffs from January 2018 to December 2019 matched to 2016 import data with positive annual exports. Each of them represents a decision by at least one firm (and likely more) regarding potentially higher costs of doing business – finding a new supplier, producing the product domestically, paying the tariffs, negotiating with existing suppliers over prices, etc.įigure 1 Cumulative count of new US import tariffs on traded goods: Country by tariff line basis By the end of 2019, over 10,000 product-country trade relationships with positive imports in 2016 faced new tariffs. Using a product imported by the US from a source country as the unit of observation, Figure 1 demonstrates that the number of trading relationships affected by the multiple waves of new tariffs is substantial. We find that the supply chain effects of import tariffs account for a substantial portion of the 2018-2019 slowdown in US exports. The importance of these supply chains means that tariffs on imports can, in turn, hurt export performance. (2019) find that when firms discussed tariffs and policy uncertainty on earnings calls in recent years, the primary concern cited was their supply chains. ![]() These cross-border supply linkages are a potentially important channel for measuring the impact of import tariffs, because they can amplify shocks to trade costs and demand across locations (Almunia et al. Lower trade costs and new communications technology (Baldwin 2016) mean that global supply chains are now a pervasive feature of world trade (Hummels et al. Since then, however, globalisation has transformed the structure of world trade. By August of 2019, $290 billion of US imports – about 12% of the total – were subject to an average tariff increase of 24 percentage points.1 The scale of these tariffs against specific products and countries, and the subsequent retaliation, has drawn comparisons to the Depression-era tariff wars of the 1930s.2 The US imposed a series of wide-ranging increases in import tariffs from 2018 through 2019. ![]()
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