How Do Tariff Shocks Influence Firm Resilience? Evidence from Sino-US Trade Tension

The frequent adjustments in tariff barriers have caused significant shocks to business environments that firms face, and thus firm resilience under external pressures is essential for economic stability and industrial development sustainability. Using panel data on Chinese A-share listed companies spanning the period from 2012 to 2022, this study employs a difference-in-differences approach to examine how tariff shocks influence firm resilience, along with the underlying mechanisms and heterogeneous effects. Our findings reveal that Sino-US tariff shock significantly weakens firm resilience and the impact shows great heterogeneity: the impact is more significant for firms with poorer financial conditions, higher supply chain concentration, and less degree of internationalization. Mechanism analysis indicates that tariff shocks impair firm resilience through four key channels: weakening supply chain resilience, exacerbating investor sentiment volatility, exacerbating profit volatility, and inhibiting innovation capabilities. This study offers valuable implications for firms seeking to enhance their ability to cope with risks, as well as for policymakers aiming to design more precise and effective trade strategies amid the rise of anti-globalization trends.