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

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  • Kazunobu Hayakawa
  • Ju Hyun Pyun
  • Nobuaki Yamashita
  • Chih‐hai Yang

Abstract

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.

Suggested Citation

  • Kazunobu Hayakawa & Ju Hyun Pyun & Nobuaki Yamashita & Chih‐hai Yang, 2024. "Ripple effects in regional value chains: Evidence from an episode of the US–China trade war," The World Economy, Wiley Blackwell, vol. 47(3), pages 880-897, March.
    • Handle: RePEc:bla:worlde:v:47:y:2024:i:3:p:880-897
    DOI: 10.1111/twec.13444
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    References listed on IDEAS

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