The Trade Effect Of U.S. Tariffs On China's Mechanical And Electrical Products

Since the 2008 financial crisis,international trade protectionism has risen.In view of huge US trade deficits,the US government has successively introduced a series of tariff protection measures to protect local companies based on bilateral trade imbalances,unequal competition,intellectual property rights and national security.On August 14,2017,Trump signed an administrative memorandum,unilaterally launching a unilateral "301 investigation".In April 2018,the U.S.officially announced the list of Chinese goods worth 50 billion dollars to be imposed on a 25%tariff based on the investigation results.So far,China and the U.S.have gone through multiple rounds of imposition escalation of additional tariffs repeatedly.This also indicates that Sino-US trade dispute has truly transformed into a tariff game between the two countries.The subsequent trend of Sino-US trade friction is difficult to predict.Mechanical and electrical products are the backbone of China's national economy.In the first half of 2019,China's exports of mechanical and electrical products accounted for 58.3% of total trade volumes.The so-called Section 301 investigation has included two-thirds of total imports from China on the list of duties.Since 2018,the tariff list issued by the U.S.also covers a large number of electromechanical products.Against the background of increasingly intensified Sino-US trade frictions,this article uses Differences-in-Differences method to collect relevant data from Customs Database at the 6-digit level of HS classification,and empirically estimate the influence and dynamic effects of the trade friction on both countries,and further discuss the adjustment and characteristics of trade policies and strategies of China in the trade friction.Based on the results of qualitative and quantitative analysis,the bilateral trade on mechanical and electrical industries between the two countries will be substantially reduced concerning the trade destruction effect.Before the U.S.imposed tariffs,products belonging to the experimental group and the control group had certain difference in export trade.After the U.S.imposed tariffs,comparing to products on the list,products without tariffs increased significantly;Concerning the trade diversion,this tariff game changed the market share of China's mechanical and electrical products and China's products has been mainly deflected to other trading partner countries;Concerning the dynamic effects of trade diversion,the trade transfer effect has shown an significant upward trend,and then the influence coefficient decreases gradually.In general,in the short term,the US tariff increase does impact China's export trade of mechanical and electrical products,but in the long term,the negative impact will be weakened.Finally,combining results,this article mainly puts forward several policy recommendations: China can introduce a large number of support policies to strengthen step up the development of mechanical and electrical industries and encourage technological innovation of enterprises;Further deepen market reforms,accelerate industrial upgrading,and strengthen industrial chain advantages;We must continue to unswervingly expand opening up,integrate into the global value chain with a more active attitude,and increase the willingness of overseas investors to invest;Adhere to the "going out" strategy,and expand cooperation methods on the basis of overseas construction of electromechanical product production bases,realize the transfer of the mechanical and electrical product processing industry to other countries through investment,construction,mergers and acquisitions;Accelerate the negotiation process of trade agreements such as RCEP,Shanghai Cooperation Organization,FTA,and vigorously promote the implementation of the "Belt and Road" initiative,It is necessary to look for trading partners dynamically and openly,expand overseas markets,and reduce the export dependence on the US market.