Bilateral Tensions, the Trade War, and US–China Trade Relations

Abstract This article constructs a measure of geopolitical and economic tensions in US–China relations based on the sentiment expressed major US news media utilizes it to analyze impact bilateral imports from China between 2002 2019. Our results suggest that have had negative effect imports. Additional analyses for industries with varying levels supply chain linkages that, contrary expectations, they more disproportionately affected highly integrated Chinese market. pattern continues hold during trade war period. Not only were associated higher tariffs high global value China, but tariff hikes also sustained such industries. Overall, our findings indicate potential “sunk costs” considerations may not been strong enough forestall downward trend under both routine diplomacy conditions.