Impact of US–China trade demand shocks on industrial Chain resilience: A knowledge and risk management perspective

Abstract

As global economic integration accelerates and international trade grows increasingly complex, trade demand shocks have emerged as a critical factor shaping the resilience of global industrial chains. This study develops a risk identification–resilience evolution–cost recovery framework to analyze the dynamic impact of demand-side trade shocks on industrial chain resilience. We model the effects of trade demand shocks on the inoperability of industrial chains using bi-regional input–output tables for China and the United States (US) to assess the resilience and robustness of sectors. This is achieved by constructing static and dynamic decision models and quantifying economic loss under various investment scenarios. The study analyzes three investment portfolios to examine how investment strategies impact the resilience of Chinese and US industries. The results provide targeted guidance for cross-regional industrial chain risk management, revealing that Chinese and US investments complement one another. China should prioritize manufacturing investment to support short-term recovery and long-term resilience, and the US should focus on the service sector, which has a crucial influence on economic fluctuations and overall stability. These findings offer valuable insights for policymakers seeking to mitigate the impact of external demand shocks while strengthening the international competitiveness and resilience of industrial chains.