Identifying and Measuring Transshipment in the U.S.-China Trade War

Originally published in the Spring 2020 Edition of the Macalester Journal of Economics

ABSTRACT

The trade war between the United States and China has caused significant economic losses to both parties. The literature indicates that China has used transshipment to avoid tariffs in the past so it is likely that such activities are occurring once more. In this paper, I seek to identify and measure transshipment in the context of the trade war between the United States and China. I find statistically significant evidence that China is rerouting almost $800 million in exports through a pool of eight intermediary countries so as to avoid the American tariffs that are levied on them. These results represent a baseline that can be used to inform future works on the issue of transshipment in the U.S.-China trade war.

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