---
title: "Is the US-China Trade War Good for the Environment?"
date: 2026-08-03
updated: 2026-08-03
tags: [US-China trade war, supply chain, greenhouse gas emissions, tariff, sustainability]
canonical: https://www.fernandogreve.com/blog/2026-08-03-us-china-trade-war-environment
---
# Is the US-China Trade War Good for the Environment?

*Updated: 2026-08-03*

> **TL;DR:** In a working paper on the US-China trade war and supply chain restructuring, I examine how tariffs changed buyer greenhouse gas emissions, buyers' supply chain governance, and suppliers' emission disclosure. Using a difference-in-differences design on US publicly listed firms that imported from China and were hit by tariffs — complemented with transshipment Bill of Lading data — I find that reshoring might be beneficial for the environment, while diversifying sourcing might be detrimental.

## Why connect tariffs to emissions?

Most of a multinational's climate impact does not sit inside its own walls: the Carbon Disclosure Project (2017) reports that large firms acknowledge **roughly 80% of their carbon emissions stem from supply chains** over which they have limited direct control. So anything that reshapes supply chains at scale — like a trade war — reshapes the geography of emissions too.

And the reshaping has been large. In 2018–2019 the US imposed tariffs on **over 60% of imports from China, mostly at the 25% level**. By 2022, US imports from China in tariffed goods were **14% lower than in 2017**, while imports of the same products from the rest of the world were **48% higher**. China's share of US imports fell from **21.6% to 16.3%** between 2017 and 2022 — back to its 2007, pre-financial-crisis level.

## What does the paper ask?

[The paper](/publications/us-china-trade-war-environment) theorizes and empirically tests the channels through which sourcing strategies defined during the tariff war — reshoring, nearshoring, supplier diversification, "China+1" — influence environmental supply chain management for greenhouse gas emissions. Three outcomes are examined: **buyer GHG emissions, buyer supply chain governance, and supplier emission disclosure**.

## How is it identified?

The empirical core is a **difference-in-differences** analysis over US publicly listed firms that imported from China and were affected by US tariffs, complemented with **transshipment Bill of Lading data** — which matters because rerouting through third countries can mask where goods actually originate.

## What did I find?

The two dominant restructuring strategies pull in opposite environmental directions: **reshoring might be beneficial** for emissions outcomes, while **diversification might be detrimental** — spreading sourcing across more, often more distant, suppliers weakens the buyer's environmental grip on its chain. Prior macro work found emission declines in the US and China but increases elsewhere (Liu et al., 2020); this paper brings a supply chain management perspective to that debate at the firm level.

For the operational side of the same restructuring — lead times, sourcing counts, performance — see the [companion paper on tariffs and global sourcing](/publications/tariffs-leadtime-performance-global-sourcing). The full text, citation, and BibTeX are on the [publication page](/publications/us-china-trade-war-environment).

*Section: Research*
*Tags: US-China trade war, supply chain, greenhouse gas emissions, tariff, sustainability*