Are R&D-Intensive Firms More Resilient to Trade Shocks? Evidence from the U.S.–China Trade War

We study whether research and development (R&D)-intensive Chinese firms were more resilient during the 2018–2019 U.S.-China trade war. Using an event study, we confirm that (unsurprisingly) Chinese exporting firms that were most affected by the new U.S. tariffs suffered larger valuation declines than other firms. However, among those most affected, those that were R&D intensive suffered significantly less severe declines. We also identify a channel that allowed R&D-intensive firms to better absorb the trade shock: their production became more efficient during the trade war. Finally, exporting firms that were not R&D intensive before the trade war invested in R&D during it