NEW HAVEN, Connecticut ¨C The United States-China trade war started in 2018 and has never officially ended. So, which side has been ¡°winning¡± it?
Recent research offers an unambiguous answer: neither. U.S. tariffs on Chinese goods led to higher import prices in the U.S. in the affected product categories, and China¡¯s retaliatory tariffs on U.S. goods ended up hurting Chinese importers. Bilateral trade between the two countries has tanked. And because the U.S. and China are the world¡¯s two largest economies, many regard this development as a harbinger of the end of globalization.
Yet the ¡°deglobalization¡± argument ignores the many ¡°bystander¡± countries that were not directly targeted by the U.S. or China. In a new paper investigating the effects of the trade war on these countries, my co-authors and I come to an unexpected conclusion: Many, but not all, of these bystander countries have benefited from the trade war in the form of higher exports.
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