This paper analyses the recent reconfiguration of international trade in goods following the increase in geopolitical tensions between the United States and China, with a focus on trade in advanced technology products and in goods critical to the energy transition. Unlike the existing studies, which are mainly focused on the United States, we pay more attention to developments in the European Union (EU) in comparison with those in the United States.
The analysis shows both a geographical and product-level reconfiguration of trade: trade between blocs from geopolitically distant countries has decreased and China's share of US and EU imports has declined, especially for advanced technology products. However, the lengthening of supply chains from China, for which evidence is provided, makes measuring foreign interdependencies ever more complex.
Forthcoming in: Journal of Industrial and Business Economics.
