The Impacts of U.S.—China Trade War on Entrepreneurship in China

The entrepreneurial consequences of the U.S.—China trade war remain difficult to identify because the escalation of tariffs closely overlapped with the COVID‐19 pandemic, another major shock that simultaneously affected firm entry and economic activity. Distinguishing the independent effect of the trade war is therefore essential for understanding how geopolitical conflicts influence entrepreneurship in emerging economies. Using panel data for 283 Chinese cities from 2014 to 2022, this paper examines whether the trade war reduced new firm entry in China. To address contamination bias arising from overlapping shocks, the study applies the multi‐period, multi‐treatment DID estimator proposed by De Chaisemartin and DʼHaultfœuille (2023). The results show that, after separating the COVID‐19 effect, the trade war does not significantly reduce entrepreneurship in tariff‐exposed industries, whereas COVID‐19 lowers new firm entry by approximately 20.27%.