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While most agree that trade wars hurt everyone, the complex nature of global trade and value chains make it very difficult to ascertain where the impacts will be concentrated and felt the most. This is particularly true for tariffs – a very blunt trade instrument that does not distinguish nuances in supply chain activities, brand ownership, exporter types, or other factors. Simply put, tariffs on China, if they manifest, will hit everyone “under the specified category,” including US and foreign exporters in China, as well as their respective suppliers both in and outside of China.
In this note, we illuminate one part of what’s at stake in this regard. Most notably, foreign firms still play a significant role in China’s “export machine,” especially in high-tech sectors. The US' proposed Section 301 tariffs stand to hurt these foreign firms the most.