Good News! The Paper Coauthored by Professor Yang Jiao and Professor Xiaxin Wang is Accepted to be Published on International Level-A Journal, Focusing on The Impact of US Tariffs on Chinese Enterprises

Release time：2022-06-16    

Recently, the paper titled “The Impacts of the U.S. Trade War on Chinese Exporters,” coauthored by Yang Jiao, Assistant Professor in Economics at FISF, and Xiaxin Wang, Associate Professor in Economics at FISF, together with collaborators Zhikuo Liu and Zhiwei Tian, was accepted to be published on the international level-A academic journal, Review of Economics and Statistics. The paper studies the impact of the US’s tariffs imposed on China in 2018 on the product prices and sales adjustments in various markets of Chinese export enterprises, making innovative contributions to relevant research on the influence of Sino-US trade frictions on Chinese export enterprises, the coverage of the impact of the tariffs and pricing，and sales adjustments of enterprises in various markets.

In 2018, the US government provoked trade frictions with a number of countries, among which China was the main target. At that time, it imposed three rounds of tariffs, raising the tax rate on the commodities imported from China worth 50 billion dollars by 25% and the tax rate on commodities imported from China worth 200 billion dollars by 10%. So how did this sharp increase of the tariffs imposed by the US affect the sales and product prices of Chinese export enterprises? The answer lies in the paper written by Professor Yang Jiao, Professor Xiaxin Wang and their collaborators.

The paper studies the response of Chinese export enterprises to the increase of the US tariffs, which is of significant reference value to understanding the wide influence of the trade frictions between the two largest economies in the world and the policy choices of the governments. Professor Yang Jiao, Professor Xiaxin Wang and their collaborators first studied the impact of tax rates on the value, quantity and FOB prices of export commodities based on the export data on the export transaction data, and found that China’s export to the US gradually declined by a big margin after the sharp increase of the US tariffs but the FOB prices hardly changed. Still, even when the relevant fixed effect of enterprises was controlled, the conclusion remained robust that the US tariffs did not change the FOB prices of Chinese exports. The paper also researched the subject of management of enterprises to explore some impediments for enterprises to make price and sales adjustments in various markets.

Figuring out who undertakes prices reflecting tariffs is a key problem. Fajgelbaum et al.(2020) found that with the increase of the US tariffs, imports fell sharply, and thus the burden of the tariffs was completely on domestic consumers in the US. In the same way, as Amiti et al.(2019) and Cavallo et al.(2021) showed, nearly all the US tariffs were undertaken by US importers. These existing documents adopted the overall data of the US import industry, while Professor Yang Jiao, Professor Xiaxin Wang and their collaborators used the data of Chinese enterprises which could control the enterprise-product-market entry and exit, but still ended up with the conclusion that the tariffs imposed by the US were almost entirely borne by US importers.

Enterprises are the final decision-makers responding to the sharp increase of tariffs. Therefore, studying adjustments made by enterprises is essential to understanding the impact of tariffs. In this paper, Professor Yang Jiao, Professor Xiaxin Wang and their collaborators discovered that with the increase of tariffs on the enterprise level arising from the sharp increase of the US tariffs, the export of Chinese enterprises to the US decreased significantly, the export of Chinese enterprises to non-US countries and regions (particularly the EU) increased a little and the domestic sales of Chinese enterprises hardly showed any change.

At the end of the paper, the professors investigated the management of 600 export enterprises, and offered new understandings of the impediments that these enterprises were faced with during their adjustment of prices and sales: among all the factors that might impede the reduction of export prices, the low-profit margin of export companies is widely considered to be the major one. Among all the factors that might hinder companies in adjusting sales in various markets to as to deal with the sharp increase of the US tariffs, the lack of distribution channels and marketing networks is deemed to be leading factors. However, other factors, including different product standards, lack of brand awareness, concerns for the low collection rate of sales outstanding or insufficient market scale, were also regarded as important impediments for enterprises to make sales adjustments in various markets.

Over the four years since the establishment of FISF, there have been 95 papers authored by 30 professors successively accepted and published by internationally acclaimed academic journals, among which 40 papers by 23 professors were published on international academic journals at A+, A and A- levels. The teaching team of the school has always upheld the school motto of “Excellence, Responsibility and Innovation”, devoting themselves wholeheartedly to the academic research work. They manage to maintain a high level of academic achievements in both quantity and quality, which fully reflects the excellent strength of the teaching team of FISF in the field of academic research. In the future, FISF will keep on pursuing international cutting-edge scientific research achievements and continue making greater contributions to the promotion of first-class financial and economic disciplines.

Introduction of Professors

Yang Jiao

Assistant Professor in Economics at FISF

Professor Yang Jiao mainly studies international finance and trade. In 2015, he took an internship in Asian Development Bank headquartered in Manila, Philippines. In 2017, he worked as a thesis intern at the Federal Reserve Bank of St. Louis. He got his Ph.D. in the Department of Economics, Columbia University and the winner of the Teaching Award.

Xiaxin Wang

Associate Professor in Economics at FISF

Professor Xiaxin Wang mainly studies taxation and public finance. His research topic was selected for the 2020 Shanghai Pujiang Talent Project. He got his Ph.D. in economics at the University of California in 2018, San Diego, a master’s degree in economics at Peking University in 2012, and a bachelor’s degree in management at Nanjing University in 2008.