We investigate how international trade shocks affect corporate investment efficiency. Utilizing a novel pairwise firm-product level dataset in China, we find that the investment efficiency of target firms significantly improves following the implementation of trade defense instruments (TDIs), including antidumping, countervailing, and safeguard measures. The reduction in free cash flow and heightened competition triggered by TDIs discourage overinvestment, particularly in firms more prone to overinvestment and those operating in industries with lower ex-ante competition. Moreover, the efficiency-enhancing effect is more pronounced in firms subject to stricter penalties and higher-value targeted products. Taken together, these findings suggest that Chinese target firms respond to international trade shocks by altering their investment strategies and improving efficiency.