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Costly signaling offers a solution to many foreign policy dilemmas. Though most commonly studied in the context of the bargaining theory of war, signaling can also play an important role in nonzero-sum interactions such as those characterized by chicken (e.g., nuclear deterrence) and the prisoner’s dilemma (e.g., tariff reductions). A rich game theoretic literature explains how actors can signal credibly in these situations. The most prominent strategies are sinking costs (actions that are costly ex ante) or tying hands (actions that are costly ex post). These strategies are theoretically elegant but have generated considerable controversy when studied empirically. One controversy concerns the existence of hand-tying domestic audience costs under different regime types. A second controversy involves the degree to which sinking costs increase or decrease the risk of war. These controversies speak to the inherent tension between theories of strategic interactions and measuring their outcomes in the foreign policy process, where some events are off the equilibrium path and thus unobserved. The limited availability of foreign policy data was a major hindrance in earlier empirical efforts. Even as the quality of this data has improved, focus has been on the outcomes of conflict (crisis onset, escalation to war, victory, defeat) rather than the strategy. This is problematic given that all crises are sequential in nature and understanding the action–reaction cycle is vital to illuminating patterns of war, capitulation, and settlement. The frontier of research in the signaling literature is in bridging this gap. The advent of big data and machine learning has enabled more systematic empirical analysis of strategic moves by various foreign policy actors, including signaling. Some researchers, such as Lindsay & Gartzke, are harnessing these new data and methods to explore the means of signaling. Other scholars are beginning to ask questions about the efficacy of public versus private signaling, the role of ambiguity, and dyadic versus multi-actor signaling. This new wave of research seeks to nudge signaling closer to the concerns of foreign policy practitioners.

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Which factors make some American multinational corporations (MNCs) take political action in response to the US–China Trade War and cause others to stay on the sidelines? We identify China-based subsidiaries of US firms to identify firms’ political actions in response to the trade war. We combine data on firms’ tariff exposure, economic actions in China, and political actions in the United States during the trade war. Together these data highlight the divergent strategies with which firms engage. Even though more than 63 percent of MNCs in our sample were adversely impacted by tariffs, only 22 percent voice opposition and 7 percent exit in response to the trade war. Our analysis reveals that US MNCs in China differ in their business models, ownership structure, experience in China, and size of capital investments. These firm-level factors determine the degree to which US MNCs are embedded in China. This in turn shapes how firms perceive political risk and choose from the menu of options to deal with the trade war. Size and age increase voice while joint-venture status decreases it.

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Emerging literature shows that rising import exposure resulting from the China shock devastated U.S. manufacturing and contributed to the rise of Donald Trump. However, several studies found that these recent localized economic shocks did not negatively impact the tenure of incumbent politicians, and this outcome remains a puzzle.In this paper, we examine the partisan difference in congressional communication strategies on China and traderelated issues. We propose a theory of China-bashing to explain how members of Congress frame the negative impacts of trade to their voters. Using press release data from members of Congress, we show that, even though Chinese import competition impacted both Republicanand Democrat-held districts, Republican politicians in adversely affected districts responded by increasing their anti-China rhetoric, while there was no similar difference among Democrats. At the same time, there was no difference between Republican and Democratic messaging on general trade issues. In doing so, Republican legislators were able to support trade liberalization during the Bush and Obama administrations while blaming its negative externalities to their constituents on China.

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