Mr. Schymik, you examined a wide range of effects on global trade, which finding surprised
you most?
Jan Schymik: The truly striking finding is that US and Chinese tariffs had completely contrasting
effects on third countries. While US tariffs on Chinese goods led to substantial increases in
production elsewhere, Chinese tariffs on US goods actually reduced manufacturing activity.
Ultimately, this demonstrates how a trade war between two major economies can reshape
production far beyond their borders.
How can these contrasting outcomes be explained?
Jan Schymik: Let’s look at the details: US tariffs made Chinese exports less competitive relative
to products from third countries. Chinese and US multinationals partly responded by using
locations such as Mexico or Vietnam as export platforms. They continued to serve the US market
while avoiding punitive tariffs. The effect could be described as “trade diversion” to third
countries, where production then increased.
By contrast, Chinese tariffs weakened the competitive position of US producers. This had
knock-on effects for firms in third countries whose products complement US exports. For
example, when a US car manufacturer exports vehicles to China, it may rely on German engines
and transmissions, Japanese electronic components, or specialized parts from suppliers in
Mexico and Europe. As Chinese tariffs reduced US car exports, demand for complementary
third-country inputs fell as well and manufacturing activity slowed down.
Which region or industry was hit hardest?
Jan Schymik: On average, our estimates suggest that third countries in Asia and North America
were most negatively affected by the first phase of the trade war. However, regional averages
conceal substantial differences across industries and firms.
As to the effects on global value chains, the clearest losses occurred in the intermediate stages.
The producers were squeezed from both sides: they faced higher costs when they relied on
inputs from China or the United States, while also finding it harder to sell to Chinese firms
whose competitiveness was reduced by US trade-war tariffs. In contrast, the industries at the
beginning and end of the value chain tended to gain overall.
Has the EU learned a lesson from the first phase of the trade war?
Jan Schymik: European and German firms have increasingly recognized the importance of
diversifying their production and supply networks. However, meaningful diversification takes
time.
Based on your research, which findings could be important for multinationals and
policymakers?
Jan Schymik: In the period we studied, multinational firms were best able to adapt to the trade
war by shifting production, sourcing, and sales across their global networks. For policymakers,
our findings underscore that the effects of tariffs travel through global value chains and foreign
affiliates, often producing unintended consequences beyond the countries directly targeted.