Name
U.S. Income Tax Incentives and Firms’ International Physical Trade Flows
Date & Time
Monday, July 6, 2026, 9:50 AM - 10:15 AM
Description
We examine how income tax incentives affect U.S. firms’ international physical trade flows. The Tax Cuts and Jobs Act of 2017 fundamentally changed the U.S.’s international tax policy, with an important objective of improving U.S. competitiveness and exports. We evaluate whether this tax reform achieved this intended goal by examining firm-level shipping container data. In a difference-in-differences approach, we find that U.S. firms more exposed to changes in the international tax provisions significantly increased their exports after the reform relative to less‑exposed firms. Cross-sectional analysis shows that these effects are stronger for firms with high pre-tax profitability, high innovation, and low shipping costs, consistent with changes in tax incentives being the underlying mechanism. At the same time, we document a stronger positive co-movement between exports to and imports from the same foreign jurisdictions in the post-reform period, consistent with tax-motivated round-tripping trades. Finally, we find no evidence of shifts in real production activities or outsourcing of domestic production. Our study provides the first empirical evidence on how this tax reform affected U.S. firms’ international physical trade flows.
Speakers
Keywords
tax planning, international trade, intellectual property, environment
Theme
TAXATION
Author 1
Travis Chow
Author 2
Xuanpu Lin
Author 3
Ed Maydew
Author 4
Guoman She