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Decoupling Where it Matters? US Imports from China in Critical Sectors
A number of policies have been recently introduced to reduce US trade dependence in critical goods. The concern behind these policies is that shocks can disrupt access to these critical goods, which can have devastating consequences for the US economy. For instance, the US enacted the CHIPS and Science Act of 2022 to increase domestic production of semiconductors to bypass sources such as Taiwan, which is subject to increasing geopolitical risks. We study whether growing concern about US-China relations has begun to reshape bilateral trade flows of critical and non-critical goods, and how it contrasts with the trend ... (full story)