Trade wars do not simply redirect exports; they also reshape the costs of production, disrupt supplier-customer relationships, and trigger adjustments within multinational firms’ global affiliate networks. This column uses data covering millions of manufacturing plants in 50 major economies to show that the US-China trade war reshaped manufacturing activity far beyond the two directly targeted economies, but not in one uniform direction. Industries in the intermediate stages of global value chains were squeezed from two sides: higher costs when they relied on US or Chinese inputs, and weaker demand from customers affected by the trade war. The most upstream and most downstream industries, by contrast, tended to gain on average.Read More
