Who Gains the Most from Trade Wars?

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Abstract

Abstract I study the impact of Section 301 tariffs, focusing on how the reduction in Chinese exports was distributed between U.S. domestic suppliers and other foreign exporters. Using fixed effects regressions, I find that exports of tariffed goods increased significantly for third-country exporters that already held substantial U.S. market shares. This suggests that the benefits of the tariffs were concentrated among large foreign suppliers rather than small exporters or domestic producers. To explain this pattern, I develop a theoretical model based on the Ramsey-Cass-Koopmans framework while incorporating investment efficiency in the capital accumulation process. The model shows that high capital endowments and low input prices allow large exporters to capture the majority of gains from the tariffs. This result has clear policy implications: Section 301 tariffs could be ineffective at revitalizing U.S. industries. Instead, the gains were likely to be concentrated on large foreign exporters in both the short and long run. The model also implies that foreign governments might find wage restraint strategically advantageous in sustaining their export competitiveness. JEL Classification: F10 , F13 , F14
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Jaejun Nam This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-7899805/v1 This work is licensed under a CC BY 4.0 License Status: Under Revision Version 1 posted 11 You are reading this latest preprint version Abstract I study the impact of Section 301 tariffs, focusing on how the reduction in Chinese exports was distributed between U.S. domestic suppliers and other foreign exporters. Using fixed effects regressions, I find that exports of tariffed goods increased significantly for third-country exporters that already held substantial U.S. market shares. This suggests that the benefits of the tariffs were concentrated among large foreign suppliers rather than small exporters or domestic producers. To explain this pattern, I develop a theoretical model based on the Ramsey-Cass-Koopmans framework while incorporating investment efficiency in the capital accumulation process. The model shows that high capital endowments and low input prices allow large exporters to capture the majority of gains from the tariffs. This result has clear policy implications: Section 301 tariffs could be ineffective at revitalizing U.S. industries. Instead, the gains were likely to be concentrated on large foreign exporters in both the short and long run. The model also implies that foreign governments might find wage restraint strategically advantageous in sustaining their export competitiveness. JEL Classification: F10 , F13 , F14 U.S.–China Trade War Third-Country Exporters Ramsey-Cass-Koopmans Framework Investment Efficiency Tariff Effects Full Text Additional Declarations No competing interests reported. Supplementary Files AppendixJaejunNam.zip Cite Share Download PDF Status: Under Revision Version 1 posted Editorial decision: Revision requested 18 Mar, 2026 Reviews received at journal 09 Mar, 2026 Reviews received at journal 30 Dec, 2025 Reviews received at journal 20 Dec, 2025 Reviewers agreed at journal 18 Nov, 2025 Reviewers agreed at journal 16 Nov, 2025 Reviewers agreed at journal 14 Nov, 2025 Reviewers invited by journal 14 Nov, 2025 Editor assigned by journal 04 Nov, 2025 Submission checks completed at journal 03 Nov, 2025 First submitted to journal 19 Oct, 2025 You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. 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