Is US Trade Policy Reshaping Global Supply Chains ?
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.
Main Authors: | , , , |
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Format: | Working Paper biblioteca |
Language: | English English |
Published: |
World Bank, Washington, DC
2023-11-01
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Subjects: | GLOBAL VALUE CHAINS, TARIFFS, DIVERSIFICATION, RESHORING, 10-DIGIT US IMPORT DATA, BILATERAL TRADE DECOUPLING, CHINA SUPPLY CHAINS, |
Online Access: | http://documents.worldbank.org/curated/en/099812010312311610/IDU0938e50fe0608704ef70b7d005cda58b5af0d https://openknowledge.worldbank.org/handle/10986/40558 |
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Summary: | 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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