The Impact of U.S. Trade Policy Uncertainty on the Trade Margins of China’s Export to the U.S.

Abstract

Since the subprime crisis, the U.S. has begun to adjust its international trade policies due to the worldwide economic slowdown, leaving its trading partners facing great uncertainty in trade policy. In this study, we developed a panel model to empirically analyze the impact of U.S. trade policy uncertainty on the extensive margin, intensive margin, price margin, and quantity margin of Chinese exports of U.S. goods. We found that U.S. trade policy uncertainty is also a trade barrier for China’s export trade. The extensive margin, intensive margin, price margin, and quantity margin of Chinese exports to the U.S. are all adversely connected with U.S. trade policy uncertainty. The increase in U.S. trade policy uncertainty significantly inhibits the increase in the extensive margin, intensive margin, and quantity margin of China’s exports to America, and the degree of inhibition of the quantity margin is five times that of the extensive margin. Increased U.S. trade policy uncertainty also restrains the increase in the price margin of Chinese exports to America, but this is not statistically significant. In this study, we emphasize the significant impact that U.S. trade policy uncertainty has had on the trade margins of Chinese exports of goods to America. To stabilize China’s exports to the United States, China should increase support for export enterprises’ technological R&D and innovation, expand bilateral or multilateral free trade agreements with other countries, and so on.