Events

Prof. Pablo D. Fajgelbaum
Professor of Economics
Princeton University

We examine how global trade responded to the US-China trade war of 2018-19. We find substantial and heterogeneous reallocations of trade volumes as a result of tariff changes. This heterogeneity is driven by country-specific responses to tariffs rather than by heterogenous specialization patterns across products targeted by the trade war. Additionally, many countries that increased their exports to the United States or China also increased their exports to the rest of the world. The impact of the trade war tariffs was to increase the total exports of most countries rather than only reallocating into the US and China at the expense of other markets. These patterns reveal country-specific substitutability or complementarity with US and China, country-specific differences in domestic factor supply elasticities, and product-level scale economies. We build a model that features these forces and combine it with the tariff variation to identify their importance in driving global reallocations.

This is a joint seminar organized by HKU, CUHK, City U, HKUST and Lingnan U.

Please contact Xiameng PAN at xmpan@connect.hku.hk for registration.