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The Impact of the US-China Trade War on Japanese Multinational Corporations
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The Impact of the US-China Trade War on Japanese Multinational Corporations

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  • SUN Chang
  • TAO Zhigang
  • YUAN Hongjie
  • ZHANG Hongyong

Abstract

Using detailed data on Japanese multinational corporations (MNCs), we examine the impact of the US-China trade war on MNC activities and market values. We first use quarterly data on the foreign affiliates of these MNCs and show that, relative to affiliates in other Asian countries, Chinese affiliates, especially those with high exposure to trade with North America (NA), in general see a decline in sales since the trade war began. This decline is largely driven by a drop in sales to third countries. Second, we use data on listed Japanese firms and find that, relative to other listed firms, firms exposed to China-NA trade see a decline in stock prices after Trump proposed tariffs on $50 billion of Chinese imports on Mar 22, 2018. This decline is larger for firms whose Chinese affiliates rely more on inputs from Japan. We see this as evidence that the negative impact of the trade war propagates through the global value chain.

Suggested Citation

  • SUN Chang & TAO Zhigang & YUAN Hongjie & ZHANG Hongyong, 2019. "The Impact of the US-China Trade War on Japanese Multinational Corporations," Discussion papers 19050, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:19050
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    References listed on IDEAS

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    Cited by:

    1. Duc Anh Dang & Ngoc Anh Tran, 2023. "The Effects of the United States-China Trade War During the COVID-19 Pandemic on Global Supply Chains: Evidence from Viet Nam," Working Papers DP-2023-11, Economic Research Institute for ASEAN and East Asia (ERIA).
    2. Mario Daniele Amore & Margherita Corina, 2021. "Political elections and corporate investment: International evidence," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(9), pages 1775-1796, December.
    3. Xu, Jin & Huang, Shoujun & Shi, Lu & Sharma, Susan Sunila, 2021. "Trade conflicts and energy firms' market values: Evidence from China," Energy Economics, Elsevier, vol. 101(C).
    4. Marlene Amstad & Leonardo Gambacorta & Chao He & Dora Xia, 2021. "Trade sentiment and the stock market: new evidence based on big data textual analysis of Chinese media," BIS Working Papers 917, Bank for International Settlements.
    5. HUANG Hanwei & SENGA Tatsuro & Catherine THOMAS & ZHANG Hongyong, 2023. "Economic Disintegration and Multinational Production: Evidence from Brexit," Discussion papers 23037, Research Institute of Economy, Trade and Industry (RIETI).
    6. Fodouop Kouam Arthur William, 2024. "Navigating the Relocation Trend: The Rising Shift of Multinational Corporations from China to Other Countries," International Journal of Science and Business, IJSAB International, vol. 34(1), pages 62-75.

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