The impact of destination tariffs on China’s exports: Country,firm, and product perspectives

Based on multi-product heterogeneous firm trade theory, we combine China's customs data with the World Integrated Trade Solution’s (WITS) tariff data from 2002 to 2013 and analyze the impact of destination tariffs on China's exports at the country, firm, and product levels. The results reveal that tariffs had a negative effect on country-level exports and their extensive margins. After controlling for the inter-firm composition effect, tariffs had negative effects on firm-level exports and their intensive margins, but positive effects on their extensive margins. After also controlling for the within-firm export composition effect, tariffs had a negative impact on the exports of core products; however, the negative impact diminished as the core grade and technological content of the products increased. Using these elasticities to analyze Sino-U.S. trade frictions, we determine that the additional U.S. tariffs reduced China's exports of high-tech products more than its medium- and low-tech products.