Two essays on the Sino-US trade

Abstract

Sino-US trade is a salient issue deriving the relationship between the two nations. This paper separately discusses the impact of the rising Sino-US agriculture trade in the early 2000s and the 2018 trade war strategy in two chapters. Both Chapters aim to provide some insights on why and how the two nations entangle with trade.

In the first chapter, I investigate the effect of rising Chinese demand for agricultural goods between 1997 and 2012 on US local agricultural sectors, exploiting cross-county variation in exposure to Chinese demand due to differences in crop/product specialisation. I find that, farmland value rises in counties that are more exposed to the rise in Chinese agricultural demand. Meanwhile, rising exports cause an increase in farmland concentration. The benefits are unequally distributed across farmers: the income of wealthy farm owners rises, but the income of poorer farm owners and typical farm labour stagnates.

In the second chapter, I study the impact on US election results from counterfactual tariff schemes in the trade war setting. I will replicate the empirical estimation in Lake and Nie (2022), take the estimation as given, and conduct counterfactual analysis by adopting hypothetical tariff schemes. In this paper, we find that within a 100% tariff scheme, China cannot alter the 2020 election result. Nevertheless, in some hypothetical scenarios, retaliation tariffs matters, and can flip the presidential election result as the tariff reaches 80%. Furthermore, optimising the total tariff flips the result with less tariff imposed.