A Retrospective on Machinery Production Networks under Trump 1.0 Tariffs: A Trade Matrix Approach with Gravity Predictions*

Abstract This paper investigates how trade patterns and supply chains in machinery industries changed between 2017 and 2023 due to “Trump 1.0” tariffs and other shocks. Utilizing an international trade matrix alongside gravity equation predictions for these years, the study yields several major findings. While U.S.–China bilateral trade contracted, overall machinery trade continued to grow, and a global decoupling of China has not been observed. Many economies actively participating in machinery production networks benefited from positive trade diversion effects in their exports to the United States. Taiwan significantly expanded its machinery exports of both final products and parts and components through supply chain restructuring. Vietnam and several other ASEAN members enjoyed positive trade diversion effects while increasingly attracting foreign direct investment, whereas some smaller, late-comer ASEAN economies experienced volatile fluctuations due to shifting U.S. trade policies. India began its integration into Factory Asia primarily from the import side. Mexico intensified its role as a bridge between Factory America and Factory Asia. Overall, Asian economies maintained or deepened their commitment to machinery production networks. The paper concludes by discussing the relevance of these insights for the current “Trump 2.0” era.