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Suppressing the Economy and Economic Resilience: How Chinese Manufacturing Firms Survive Under U.S. Tariff Shock

Author(s)

Shuyi Li

Affiliation(s)

Central South University, Changsha, Hunan, China

Abstract

This study investigates the resilience recovery mechanisms of Chinese manufacturing firms under the shock of the U.S. imposing additional tariffs of 104%–145% on Chinese goods amid the escalation of the China-U.S. trade war in 2025. Based on the "resilience threshold hypothesis" proposed by the Trump administration (Trump, 2025), which argues that economic suppression can stimulate structural upgrading, and combining it with economic resilience theory, this paper constructs a dynamic framework of "policy shock-firm response-resilience recovery." Using a Difference-in-Differences (DID) model, it compares data from 2018–2022 for technology-intensive firms (high-tariff group) and labor-intensive firms (low-tariff group), supplemented with case studies of firms such as coffee machine manufacturers and mobile food truck exporters. The findings show that technology-intensive firms significantly improved their survival rates through policy synergy (e.g., tax reductions and government R&D subsidies), while labor-intensive firms are more prone to path dependency and lock-in. This research provides a practical "survival toolbox" for manufacturing firms and critically discusses the conflict between Trump's "creative destruction" hypothesis and classic resilience theory.

Keywords

Tariff Shock; Economic Resilience; Manufacturing Firms; Survival Strategies

References

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