Using employee-employer matched data, I analyze the impact of a low-wage trade shock on manufacturing workers in a high-wage country, Denmark, and how they adjust to the shock over a decade. I derive causal effects by exploiting the dismantling of the Multifiber Arrangement quotas on products from China upon its WTO accession as a quasi-natural experiment and use within-industry, within-occupation heterogeneity in workers’ exposure to this shock. I find significant negative long-run effects on earnings and employment trajectories and identify job instability in the service sector as a main adjustment friction, concentrated among workers with manufacturing-specific education and occupation. The results establish the importance of specific human capital in trade adjustment and provide evidence of skill upgrading as workers rebuild lost human capital through education.

Facing the same labour demand shock through imports from China, we show that men and women make different labour market and family adjustments that result in significant long-run gender inequality. The gender gap is driven by the female biological clock. Using population registers and matched employer-employee data from Denmark, we document that especially women in their late 30s, towards the end of their biological clock, decide to have a baby as the shock causes displacement. High-earning women in leadership positions and women who need to acquire new human capital are central because their new employment would require particularly high investments that are incompatible with having a newborn in the short time remaining on the biological clock. While children penalize women in the labour market, we show that due to the biological clock an otherwise gender-neutral shock leads to a gender gap in the labour market.

We examine how the 2018–19 US–China trade war affected Mexican firms' trade and find that US tariff hikes on China increased exports to the US, imports from the US and Asia, and net exports overall. Distinguishing firms by global value chain (GVC) participation and parent country, we show that foreign multinationals in technology-intensive industries drove much of the adjustment. Heterogeneous responses between US and non-US MNEs highlight nearshoring dynamics and GVC reorganization toward Mexico. The results provide firm-level evidence of trade policy's transformative effects on GVCs and the role of MNEs in transmitting policy spillovers to third countries.