US –China Trade War : The Effects of Trade Conflict on Brazilian Exports

ABSTRACT Protectionist practices and their implications have been extensively studied in the literature, but few studies have examined the effects of trade competition between two countries on a third country. This paper aims to investigate how a demand shock triggered by China's retaliation against US exports affects Brazil's exports to China. We construct a monthly database, at the product level, which combines commercial transactions with tariff changes for the period from January 2018 to June 2019. Using the empirical difference‐in‐differences strategy and the event‐study, which compares affected and unaffected products before and after the tariff change, we find positive and consistent effects on the value and quantity of exports. The estimates indicate a notable increase of 28.4% in exported value and 21.2% in quantity. Dynamic effects show that the magnitude of the impact increases over time. Robustness tests support these results, and we also provide evidence of sectoral heterogeneity.