Examining the impact of trade tariffs on semiconductor firms' environmental performance

Abstract

This study investigates how US-China geopolitical tensions affect the environmental performance of semiconductor firms, highlighting the critical intersection between international relations and corporate sustainability. Drawing on a comprehensive dataset of semiconductor firms from 2015 to 2020, we find that heightened bilateral tensions significantly impair firms’ environmental performance through increased operational uncertainty and global supply chain disruptions. Our analysis reveals that firms with greater exposure to these tensions demonstrate reduced investment in environmental initiatives, decreased energy efficiency, and diminished commitment to emissions reduction targets. These findings underscore how geopolitical frictions can undermine global progress towards sustainable development goals and emphasise the importance of maintaining stable international relations for corporate environmental stewardship. We suggest that fostering international cooperation and reducing political tensions are crucial for enabling semiconductor firms to sustain and enhance their environmental commitments. The results demonstrate that sustainable development in the semiconductor industry benefits from stable international relations and collaborative global frameworks.