Work in progress

Abstract: Trade wars do not just reallocate trade flows --- they reshape market structure. In oligopolistic export markets, tariffs induce foreign exporters to exit, concentrating market power among survivors and triggering markup adjustments that feed back into participation. We build a multi-country model combining oligopolistic competition, endogenous export participation, and production networks, disciplined by firm-level tariff elasticities from granular export data and bilateral trade and expenditure shares from the 2022 OECD Inter-Country Input-Output table. We derive an exact welfare decomposition and use a four-regime contrast to isolate the non-additive feedback between markup adjustment and firm participation. With a fixed set of suppliers, markup adjustment barely moves welfare --- the US loss changes from 0.57% to 0.55% of consumption --- an oligopolistic analogue of the ``elusive pro-competitive effects'' of Arkolakis et al. (2019). Once exporter participation responds endogenously, the loss rises to 0.95% with frozen markups and to 1.07% when markups also adjust.