This paper examines whether the effects of government subsidies propagate through production networks. Using a supplier–customer–year panel from 2003 to 2024, I show that suppliers linked to subsidized customers experience higher valuation, profitabil- ity, and operating performance. Exploiting changes in U.S. congressional committee leadership as an instrument for customer subsidy receipt, the results confirm a causal spillover from customers to suppliers, particularly when suppliers are economically dependent on subsidized customers. Mechanism tests indicate that the spillover oper- ates through a demand and expansion channel: subsidized customers increase orders, deepen trade credit relationships, and strengthen technological collaboration with sup- pliers, improving suppliers’ financial flexibility. The findings show that firm-targeted subsidies affect not only recipients but also connected firms through real production linkages.