The Impact of tariff increase on export and employment of Chinese firms

Abstract

This paper examines the impact of the tariff increase implemented by the U.S. in 2018 on Chinese firms' export and subsequent employment adjustment. Under the influence of front run shipment and expected stock pile, the export volume increased by 10% after the tariff increase in 2018. While firm employment remains stable, the average working hour and wage increased. In 2019, with the impact of tariff increase gradually emerging, the export volume declined significantly. However, Chinese exporter did not cut jobs on a large scale. Instead, they reduced the per capita working hour and other employment costs, leading to a simultaneous decline in wage and non-cash benefits. The latter contributes to more than 42% of the decline. Our study indicates that the impact of tariff on employment is mainly reflected in the intensive rather than extensive margin.