When the U.S. blocks tech trade with China, our own economy actually takes a bigger punch than theirs does.
SSRN · March 18, 2026 · 6414899
The Takeaway
Conventional wisdom suggests that decoupling gives the U.S. leverage over China. However, this study found that the resulting financial shocks are highly asymmetric, with risk transmission flowing from China to the U.S. much more strongly than the other way around, turning tech policy into a major source of American systemic financial instability.
From the abstract
This study examines how U.S.–China technology decoupling reshapes systemic financial risk through tail-risk spillover channels. Using daily data from 2015–2024, we construct a policy-based technology decoupling event indicator capturing major export controls, entity listings, and restrictions on technology, capital, and data flows. We combine Conditional Autoregressive Value-at-Risk (CAViaR) estimation with time-varying VAR connectedness and GJR-GARCH models to analyze cross-border tail-risk tra