THE ASYMMETRIC IMPACT OF US TARIFFS ON CHINESE ECONOMY

Abstract

The US-China trade war, initiated in January 2018, is an ongoing major economic conflict between the two largest economies. This paper analyzes its impact on the Chinese economy by utilizing a fixed-effects regression model on annual provincial- level data from the National Bureau of Statistics China (2015-2020). It explores the impact of US tariffs of eleven key economic indicators, measuring international, aggregate outcomes, government finances, and household outcomes. Results show an asymmetric impact on China’s economy: the employment of households is adversely impacted, while aggregate output and government finances are buffered. In conclusion, the paper discloses how effective the protective measures that the Chinese government utilize minimize the economic damage of U.S. Tariffs, revealing the significance and priorities of different economic agents within its economy.