Trade Within Multinational Boundaries
July 2025
Working Paper Number:
CES-25-46
Abstract
We leverage newly linked data from the U.S. Census Bureau and the U.S. Bureau of Economic Analysis to study transactions within U.S. multinational enterprises (MNEs). We show that using administrative data on intrafirm trade allows us to correct for measurement error in survey data and to identify the positive relationship between input-output (IO) linkages and the probability of trade between U.S. parents and their foreign affiliates. We also document the prevalence of intrafirm trade: more than half (three-quarters) of affiliates worldwide (in North America) export to or import from their U.S. parent. Our findings provide strong empirical support for traditional theories of firm boundaries that predict trade between vertically linked units of the same firm, and underscore the importance of accounting for the trade frictions that shape MNEs' regional supply chains.
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:
economist,
enterprise,
import,
export,
international trade,
subsidiary,
sector,
tariff,
shipment,
exporter,
multinational,
foreign,
gdp,
firms export,
supplier,
imported,
trading,
importer,
multinational firms,
downstream
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:
Bureau of Economic Analysis,
Federal Reserve System,
North American Free Trade Agreement,
Census Bureau Business Register,
American Housing Survey,
Census Bureau Disclosure Review Board,
Longitudinal Firm Trade Transactions Database,
Customs and Border Protection
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