When import-tariff reductions exposed U.S. manufacturers to stronger foreign competition, companies generally responded by expanding strategic alliances rather than buying more businesses. A 2026 study of 1,127 U.S. manufacturing firms found that alliance formation rose after competitive pressure increased, while acquisition activity stayed broadly unchanged.
What the 2026 study found
Hanwen Sun and colleagues examined how changes in the boundaries of U.S. manufacturing firms followed staggered import-tariff reductions between 1990 and 2020. The study, published in the Journal of Business Finance & Accounting, used tariff changes as shifts in foreign competitive pressure. Many of the reductions accompanied NAFTA implementation in 1994; the largest group of observations occurred in 1995, with further cuts in 1992, 1997, 2004 and 2008. The paper is available through its DOI: 10.1111/jbfa.70091.
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The central result was a divergence between two external-growth choices:
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1Scan for outdated or missing drivers - takes under a minute2Clear out junk files and repair common Windows errors3Fix the driver behind crashes, sound loss and screen glitches- Firms facing greater foreign competition were more likely to expand strategic alliances.
- Their acquisition activity remained broadly unchanged.
In other words, the typical response to a tariff-related competitive shock was collaboration with outside organizations, not a new wave of takeovers.
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Why an alliance can be preferable to an acquisition
An acquisition gives a buyer control, but it also requires a large up-front commitment and brings integration, financing and operating obligations. An alliance can provide access to capabilities without transferring ownership of an entire company. The study characterizes alliances as a flexible, cost-effective way to share risk, reach technology and combine knowledge or resources.
| Decision factor | Strategic alliance | Acquisition |
|---|---|---|
| Up-front commitment | Usually allows a staged or shared commitment | Requires a purchase and the obligations of ownership |
| Financial and operational flexibility | Partners can divide investment and responsibilities | Buyer assumes control, integration work and ongoing operating exposure |
| Access to capabilities or markets | Partners can exchange technology, knowledge, resources or market access | Buyer obtains the target’s operations and capabilities under one owner |
| Risk sharing | Risk and costs can be distributed between partners | Most transaction and integration risk sits with the acquirer |
| Innovation signal in this study | Alliance-forming firms later showed higher R&D intensity and patent output | No comparable increase in acquisition activity was reported |
The table describes the strategic distinction examined by the study, not a universal cost ranking. The paper does not report a single dollar price showing that every alliance is cheaper than every acquisition.
Which firms leaned most toward partnerships?
The alliance preference was strongest among companies with less room to finance or operate an acquisition, firms already at a competitive disadvantage, and firms in industries with lower barriers to entry. For these businesses, partnering can provide a way to respond quickly without stretching the balance sheet or taking on the full complexity of a merger.
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The partners were not limited to direct rivals. The study describes alliances involving companies in the same industry as well as organizations in high-tech, business-to-consumer and product-differentiated sectors. That breadth matters because a tariff shock can create needs beyond factory capacity—for example, technology, distribution knowledge or a route to customers.
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What happened to innovation?
Manufacturers that formed alliances in response to competitive pressure subsequently recorded higher R&D intensity and greater patent output. This pattern suggests that collaboration may help firms convert an external threat into investment in new products or processes.
However, the reported relationship is an association, not a randomized causal estimate. The evidence shows that alliance formation and later innovation moved together in the studied firms; it does not prove that the alliance alone produced every additional research dollar or patent.
How tariff cuts changed the competitive setting
Lower import tariffs can make foreign goods more competitive in the U.S. market. The study’s staggered design follows firms as those changes arrived at different times, allowing the researchers to compare periods before and after reductions across the 1990–2020 sample. The largest cluster around 1995 reflects the period after NAFTA implementation, while reductions in 1992, 1997, 2004 and 2008 supplied additional episodes of changing competitive pressure.
The result is not a claim that every tariff change produces the same corporate response. It is evidence from U.S. manufacturing firms exposed to import-tariff reductions during this historical window.
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What the finding means for managers
Use alliances when speed and flexibility matter
A partnership can open access to technology, knowledge or distribution while allowing each company to retain more financial and operational flexibility. That structure is particularly relevant when management cannot justify the price or integration risk of a purchase.
Match the partner to the capability gap
The study’s examples span same-industry and cross-sector relationships. A manufacturer facing a new overseas rival may need a technology partner, a consumer-channel specialist or a company with differentiated products—not necessarily another factory.
Treat innovation metrics as an outcome to manage
Higher R&D intensity and patent output followed the alliance response in the study. Companies considering a partnership should therefore define measurable technology and product-development goals rather than treating the agreement as a defensive announcement.
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The evidence does not show acquisitions becoming impossible or universally inferior. It shows that acquisition rates stayed broadly unchanged while alliances increased under the particular competitive shocks studied. Control, ownership and integration may still justify a purchase in circumstances not captured by this result.
Limits on applying the result today
- The sample contains 1,127 U.S. manufacturing firms.
- The observation window runs from 1990 through 2020.
- The analyzed events are import-tariff reductions, not tariff increases.
- The findings are about manufacturing and should not automatically be extended to services or other non-manufacturing sectors.
- Results from the United States and this period may not describe firms in other countries or every current trade dispute.
- The innovation result is correlational rather than proof of a direct causal effect from alliances.
For policymakers, the implication extends beyond import volumes. As Dr. Chenjian Zhang of the University of Western Australia Business School put it, “Changes in tariff policy have implications far beyond trade flows, reshaping competitive pressures and influencing how businesses grow, collaborate and innovate.” A tariff decision can therefore alter not only who sells into a market, but also whether domestic firms choose ownership or cooperation as their path to resilience.
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