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Is US Trade Policy Reshaping Global Supply Chains ?

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  • Freund,Caroline
  • Mattoo,Aaditya
  • Mulabdic,Alen
  • Ruta,Michele

Abstract

This paper examines the reshaping of supply chains using detailed US 10-digit import data (tariff-line level) between 2017 and 2022. The results show that while US-China decoupling in bilateral trade is real, supply chains remain intertwined with China. Over the period, China’s share of US imports fell from 22 to 16 percent. The paper shows that the decline is due to US tariffs. US imports from China are being replaced with imports from large developing countries with revealed comparative advantage in a product. Countries replacing China tend to be deeply integrated into China’s supply chains and are experiencing faster import growth from China, especially in strategic industries. Put differently, to displace China on the export side, countries must embrace China’s supply chains. Within products, the reorientation of trade is consistent with a “China + 1” strategy, as opposed to diversified sourcing across multiple countries. There is some evidence of nearshoring, but it is exclusive to border nations, and there is no consistent evidence of reshoring. Despite the significant reshaping, China remained the top supplier of imported goods to the US in 2022.

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  • Freund,Caroline & Mattoo,Aaditya & Mulabdic,Alen & Ruta,Michele, 2023. "Is US Trade Policy Reshaping Global Supply Chains ?," Policy Research Working Paper Series 10593, The World Bank.
    • Handle: RePEc:wbk:wbrwps:10593
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    1. Alberto Cavallo & Gita Gopinath & Brent Neiman & Jenny Tang, 2021. "Tariff Pass-Through at the Border and at the Store: Evidence from US Trade Policy," American Economic Review: Insights, American Economic Association, vol. 3(1), pages 19-34, March.
    2. Aaron Flaaen & Ali Hortaçsu & Felix Tintelnot, 2020. "The Production Relocation and Price Effects of US Trade Policy: The Case of Washing Machines," American Economic Review, American Economic Association, vol. 110(7), pages 2103-2127, July.
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    1. Garcia William Connell & Ho Victor, 2025. "External Vulnerability Index: A Tool to Assess Trade Weaknesses," Intereconomics: Review of European Economic Policy, Sciendo, vol. 60(1), pages 40-45.
    2. Andreas Baur & Florian Dorn & Clemens Fuest & Lisandra Flach, 2025. "Geoeconomic Fragmentation and the Role of Non-Aligned Countries," Rationality and Competition Discussion Paper Series 526, CRC TRR 190 Rationality and Competition.
    3. Dai,Mi, 2025. "The Impact of the China-U.S. Trade War on China’s Outward Foreign Direct Investment," IDE Discussion Papers 955, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    4. Toshiyuki Matsuura, 2025. "Navigating Trade Shocks: The Impact of the US-China Trade War on Japanese Exporters and MNEs," Working Papers e213, Tokyo Center for Economic Research.
    5. Ma. Joy V. Abrenica & Anthony G. Sabarillo, 2024. "How might China-US industrial policies affect the Philippines?: a quantitative exercise," Philippine Review of Economics, University of the Philippines School of Economics and Philippine Economic Society, vol. 61(2), pages 171-198, December.

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