Trade War Lab: A Year in Review

A look back at the research we covered on trade politics, U.S.-China relations, and the new economics of decoupling

Dear Reader:

Many of us at the Trade War Lab were skeptical when a group of ambitious new research assistants began talking about starting a Substack in April 2025. Partially responsible for the publication’s content as lab manager, I wondered what wisdom a group of twenty-somethings could add to the conversation about trade politics. At the same time, the lab had just lost federal funding. Launching a publication worth reading, among all the lab’s other projects, was going to be an uphill climb.

Looking back, launching the Substack is one of the achievements the lab is most proud of this year. Nearly every research assistant has contributed at least one article. In particular, Charlie Andrade’s role in pushing the lab to actually launch a Substack rather than just talk about it, and his excellent graphic design skills, were key to the publication’s success. Lance Lang, Maddie Doyle, and Stephen Zaken’s enthusiasm for taking assignments was also crucial. Editing the Substack and watching research assistants improve both their writing and their understanding of social science research has been the most rewarding part of my job.

Charlie, several RAs, and I are all moving on to new things with the end of the school year. The Substack will be left in good hands – more on that later – but first, I wanted to close out the year by pulling together the literature we’ve covered into a coherent (slightly editorialized) set of insights about firm politics and U.S.-China relations.

Background

After an amicable period during which many political elites believed open trade with China would liberalize their political system, two things became apparent. First, although it remains contested whether Beijing actively seeks to undermine the liberal international order, it has neither become a trusted democratic ally nor refrained from building its own capacity for economic coercion. Second, despite free trade’s national-level benefits, globalization produced isolated sets of “economic losers” in labor-intensive industries. For one reason or another (possibly some combination of voter backlash, elite security concerns, and political opportunism) these two outcomes preceded a sharp protectionist turn on both sides of the aisle.

The new politics of trade

Free trade is out, and something-short-of-autarky is in. America’s trade policy has been hawkish compared to other countries. For example, Japan’s approach to “de-risking” involves narrowly targeted legislation aiming to reduce dependence on China in industries key to national security, an initiative firms have responded to. In the U.S., policymakers’ approach to China has been broader, politicized, and, in the case of Trump’s most recent trade policy, dubiously legal.

Firm responses to the United States’ most high-profile strategy for disentangling Washington’s economy from Chinese supply chains – tariffs – vary significantly between companies. The first trade war did prompt a relatively small number of companies to exit China because of rising political risk, but corporations with large capital investments in China have largely stayed put. Some companies divert their supply chains in the face of economic barriers to trading with non-allies, but they only do so when there are safer third-country suppliers.

Even with some limited disinvestment from China, new supply chains are not necessarily more resilient to Chinese influence than previously. Countries that are highly interconnected with China have seen the fastest increase in trade with the United States since the first trade war. Although friend-shoring occurred, key determinants of which countries replaced Chinese suppliers were whether existing exports could function as substitutes and how quickly countries could ramp up production.

Where is the backlash?

Given that early evidence suggests American efforts to disentangle supply chains from Chinese influence were ineffective, why haven’t companies, faced with higher costs, protested? In our own survey of Kansas City–area firms the vast majority opposed tariffs. Indeed, trade restrictions were followed by a sharp increase in trade-related lobbying, but few companies have protested publicly. Conventional wisdom suggests that corporations should play a significant part in swinging political pressure back towards liberalization, especially considering American institutions are particularly amenable to special interests.

One answer might be that individual companies are avoiding public opposition to the trade war as a whole. Large companies appear to have successfully lobbied for tariff exclusions that benefit specific products they import, leaving smaller companies to fend for themselves if they do not use those products. Firms may also be lobbying as part of global supply chains, as opposed to collectively as industries, producing small carve-outs rather than more costly general opposition to tariffs. A political environment where companies may fear backlash if they publicly criticize tariffs and other trade barriers could also contribute to the use of quieter, narrower political influence tactics.

A second, possibly more concerning, reason could be political polarization. Corporations’ opinions on tariffs appear to be highly partisan. Even when firms are given information about the costs of tariffs, political culture outweighs knowledge of tariffs’ negative effects when determining which firms say they will reach out to representatives. This effect is not just talk: Farmers in more conservative areas were more likely to continue planting crops targeted by Chinese retaliatory tariffs in 2019, believing Trump’s assurances that these commodities’ plunging values would be temporary. If these studies are representative, the strength of business owners’ political loyalties could prevent them from organizing around what is best for their bottom lines.

Next steps for the Trade War Lab Substack

In sum, the politics of trade have changed rapidly in the past decade. Business interests have not mobilized to oppose these new trade restrictions to the extent scholars expected, despite the costs they impose. Further, broad tariffs seem unable to eliminate U.S.-Chinainterdependence.

These issues are the subject of a growing body of research in international political economy (IPE). With editing taken over by political science PhD student Callie Raacke, I am confident the Substack will identify and explain the best new research being produced. Under Callie’s guidance, the lab also plans to expand into covering classic works in IPE and showing how they can help us explain today’s trade politics. Finally, Masha Shirikov will be taking over our graphic design.

I am excited to see where the next group of editors and writers takes the Substack. There will be no shortage of important subjects to cover. If you are a University of Kansas undergraduate interested in contributing to IPE research and the Substack, look for the application for the fall internship in September. We’d love to have you!