The Remains of the Trade: The U.S.–China Trade War and its Aftermath

We study how the U.S.-China trade conflict has reshaped global trade patterns and how these changes interact with the rise of geoeconomic rivalry. Using recent tariff policy changes and monthly international trade flow data, we document a large reallocation of imports and exports away from direct U.S.-China links and toward third-country economies. To interpret these third-country outcomes, we introduce a taxonomy that separates various exposure margins - export competition, import exposure, sourcing opportunities, and rerouting potential - and construct simple indices that map countries into these channels. We then show that geopolitical alignment has become increasingly predictive of bilateral trade outcomes, and we develop a framework in which geopolitical influence alters unilateral tariff incentives and the sustainability of cooperative trade policy. The results help explain recent mounting strains on the rules-based trading system.