The impact of the U.S.-China trade war on air and ocean shipments

Abstract

This paper estimates the impact of the U.S.-China trade war and the consequent increase in trade costs on air and ocean shipments between the two countries. Using panel data covering U.S. exports and imports with its trading partners from 2016 to 2021, we estimate gravity models and find evidence showing negative impacts of the trade war on both U.S. imports from China and U.S. exports to China. However, there are differential impacts on air shipments and ocean shipments. Specifically, we find that U.S. tariff increases on Chinese goods primarily had a negative effect on air imports from China, whereas China's retaliatory tariffs on U.S. goods mainly had a negative impact on U.S. ocean exports. These findings contribute to the growing body of evidence on the effects of the U.S.-China trade war, highlighting the varying impacts of the trade war on different modes of transportation that drive the U.S.-China trade relationship.