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<p>The increasing interdependence of global value chains has heightened the exposure of international trade networks to external shocks, particularly those originating in major economies. During the 2018–2019 US-China trade war, sector-specific tariffs disrupted not only bilateral trade but also third-country linkages embedded in complex network structures. This study applies a Trade Network Shock Propagation (TNSP) model to 294-nodes weighted directed trade network constructed from OECD TiVA data, simulating supply and demand shocks from China’s and the United States’ Manufacturing sectors. Results show that China’s Manufacturing sector generates faster and broader contagion, especially in the early transmission stage, affecting downstream sectors across Asia and emerging markets. In contrast, the United States Manufacturing shocks exhibit delayed diffusion, with effects concentrated in later transmission rounds. Sectorally, Manufacturing, Mining, and Services emerge as highly exposed, while Agriculture, Utility and Construction play secondary roles. The findings highlight structural asymmetries in trade networks that influence shock propagation timing and scale. These patterns underline the importance of considering sectoral interdependencies and directional trade ties when assessing systemic vulnerabilities. The study contributes to the trade network field by integrating sector-level granularity with a contagion-based simulation model. Policy implications suggest the need for diversified sourcing strategies, regional buffer mechanisms, and sector-sensitive trade risk assessments to build resilience against external disruptions.</p>

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US-China trade war shocks in value-added trade: sectoral network simulation of supply and demand propagation

  • 期刊论文

  • 发表日期：

    2026年4月22日

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  • Idzrin Idzwana Ismail,
  • Fathin Faizah Said,
  • Fatimah Abdul Razak,
  • Zulkefly Abd Karim,
  • Abdul Hafizh Mohd Azam

摘要

The increasing interdependence of global value chains has heightened the exposure of international trade networks to external shocks, particularly those originating in major economies. During the 2018–2019 US-China trade war, sector-specific tariffs disrupted not only bilateral trade but also third-country linkages embedded in complex network structures. This study applies a Trade Network Shock Propagation (TNSP) model to 294-nodes weighted directed trade network constructed from OECD TiVA data, simulating supply and demand shocks from China’s and the United States’ Manufacturing sectors. Results show that China’s Manufacturing sector generates faster and broader contagion, especially in the early transmission stage, affecting downstream sectors across Asia and emerging markets. In contrast, the United States Manufacturing shocks exhibit delayed diffusion, with effects concentrated in later transmission rounds. Sectorally, Manufacturing, Mining, and Services emerge as highly exposed, while Agriculture, Utility and Construction play secondary roles. The findings highlight structural asymmetries in trade networks that influence shock propagation timing and scale. These patterns underline the importance of considering sectoral interdependencies and directional trade ties when assessing systemic vulnerabilities. The study contributes to the trade network field by integrating sector-level granularity with a contagion-based simulation model. Policy implications suggest the need for diversified sourcing strategies, regional buffer mechanisms, and sector-sensitive trade risk assessments to build resilience against external disruptions.