The Effects of Trump's Trade War with China on Japan's Trade

Using monthly trade data for the United States (U.S.), Japan, and China, this study investigates the effects of 45th U.S. President Trump's trade war with China on Japan's trade. Although Japan's import values and quantities of Trump-targeted goods from China did not increase, the import price did decrease slightly. Japan seems to have enjoyed a terms of trade effect because of Trump's trade war with China. Contrary to a priori expectation, Japanese industries which are linked as the upstream industry of China's (downstream) industries subjected to Trump tariffs are shown to have increased their exports to China. To investigate this unexpected result, this study analyzes China's exports of Trump tariff-targeted goods to the world and finds that China's exports of these goods to the world increased. An increase in China's exports to countries other than the U.S. more than offset the decrease in its exports to the U.S.