A1258
Title: Reconfiguration of global sourcing strategy in response to the us-china trade conflict
Authors: Yanqing Wang - Georgia State University (United States) [presenting]
Abstract: Using classical regression and machine learning methods, it is studied how the US-China trade conflict affected US-listed firms' global sourcing strategies from 2014 to 2023, based on a unique US Customs dataset from FactSet. We identify three sourcing strategies: Stay in China, Increase in China, and Withdraw from China. Among firms that withdrew, we distinguish between substantive reconfiguration (friend-shoring) and symbolic reconfiguration (springboarding). The trade conflict reduced the share of imports from China and increased sourcing from friend-shoring and springboard countries. Random Forest models reveal non-linear effects: (a) an inverted U-shaped relationship between firm size and withdrawal likelihood; (b) as profitability increases, firms move from withdrawal to staying and then to increasing presence in China; and (c) a U-shaped relationship between tariff shock and withdrawal probability. For firms that withdrew, we find (a) an inverted U-shape between size and choice of friend-shoring or springboarding; (b) an S-shaped link between profitability and reconfiguration type; and (c) a preference for springboarding under smaller tariff shocks.
