The Impact of Import Penetration on Corporate Trade Credit

Tariffs play a pivotal role in the economic domain. Against the backdrop of supply chain finance, this paper investigates how import penetration affects corporate trade credit. Utilizing a sample of A - share listed companies from 2012 to 2020 and import data at the HS6 - digit code level obtained from the WITS database, our results demonstrate that the level of import tariffs can enhance corporate trade credit. The reduction in corporate trade credit primarily impacts the supply of trade credit rather than its acquisition, indicating that firms alleviate competitive pressures by extending payment terms to downstream partners. The findings hold robust across a series of robustness tests. We further uncover that import penetration can diminish corporate trade credit through three mechanisms: firm bargaining power, customer dependency, and firm operating efficiency. Ultimately, this paper contributes by integrating tariff-driven competition into the trade credit framework, uncovering the micro-level transmission of macroeconomic policies to corporate financial decisions via supply chains. It offers policy insights for balancing trade openness with financial stability.