Tariffs were supposed to “decouple” the U.S. from China. Instead, they reshuffled supply chains. China’s share of U.S. imports fell ~6%, but Chinese inputs still arrive via third countries. Read:

Bottom line: tariffs can reduce direct U.S.–China trade yet leave the U.S. embedded in Chinese supply chains via third countries. Decoupling rhetoric, interdependence reality. https://t.co/woAeQnSO4D

Key twist: the fastest export growth to the U.S. came from countries already linked to China. From the 25th→75th percentile in China linkage: +4.2% more strategic-goods exports. In strategic industries, Korea and Thailand replaced China.

Who gained when Chinese tariffed goods slowed? Biggest import-share winners: - Vietnam (+1.9ppt) - Taiwan (+0.8) - Canada (+0.8) - Mexico (+0.6) - India (+0.6) - Korea (+0.5). Classic nearshoring + friendshoring.

How do we know it’s tariffs (not other shocks)? A difference-in-differences design compares tariffed vs non-tariffed products, China vs the rest of the world, before vs after the trade war. The result: diversion, not reshoring.

Bottom line: The trade war didn’t halt globalization — it reshuffled power inside it. Neutral economies stepped in, filled the gap, and rewrote the global supply map in real time. Read more: https://t.co/7GI0d0hUvO

The big insight: It wasn’t about what countries already specialized in. It came down to country-specific resilience — the flexibility to pivot supply and serve markets suddenly blocked from China and the US. The trade war rewarded adaptability, not history.

The winners weren’t random. Countries that gained shared two traits: • They produced goods that could replace American/Chinese products • They could rapidly scale production to meet demand Think Thailand → big jump. Mexico → big jump. Ukraine → decline.

New research (Fajgelbaum, Khandelwal, Goldberg, Kennedy & Taglioni) finds that average countries increased exports of tariffed goods during the conflict, rather than simply redirecting old trade flows. Globalization didn’t retreat. It re-routed.

When the US-China trade war began in 2018, the world expected global trade to shrink. Instead, something unexpected happened: neutral countries filled an $800B vacuum left by tariffs, and many walked away richer. 🧵

This matters for understanding globalization: foreign investment doesn't just move capital across borders, it restructures host country political economy and creates new coalitions that shape trade rules. Read more: https://t.co/eSyDQeU30p

The political impact is measurable. In the 2015 Vietnam-South Korea FTA, products linked to foreign investment received 19-30% larger tariff cuts than non-FDI products. Host governments allocate policy benefits to sectors where multinationals have established presence.

Vietnam offers a clear example. After Samsung and Intel established operations, electronics-related exports increased 90% within four years while imports rose 30%. The economy shifted from natural resource dependence to electronics manufacturing, changing the flow of trade.

The mechanism works in two stages. First, foreign direct investment changes what host countries import and export, expanding trade in sectors directly related to the investment. Second, this creates political coalitions between multinationals and local suppliers who lobby.

We know corporations shape politics in their home countries. But what happens when they invest abroad? New research examining 180,000 foreign investment projects across 100+ countries reveals how multinational corporations shape trade policy in the countries where they invest.

Chinese economic integration produces more nuanced effects than simplified media narratives suggest. Read more: https://t.co/Zwwlml6arD

The effect has limits. Highly nationalistic Americans show less than half the response of those with weaker national attachments. For some portion of the population, identity-based threat perceptions override economic considerations regardless of tangible benefits.

The mechanism is information transmission. Local newspapers frame greenfield announcements around job numbers and growth. Communities learn about opportunity, not risk. When local media covers the investment, the effect doubles compared to unreported projects.

But Chinese acquisitions of existing American companies produce no similar effect. The difference: greenfield projects create visible new jobs and infrastructure, while acquisitions carry ambiguous employment consequences and potential restructuring.

New research from CMU finds that Chinese greenfield investment (building new factories from scratch) reduces American threat perceptions by up to 10 percentage points. Each logged unit of job creation decreases the probability of viewing China as a threat by 1%.