We identify a novel channel through which financial constraints propagate in the production chain. Exploiting recent developments on production network data of US-listed firms, we show that firms experience greater valuation losses during industry downturns when their suppliers are financially constrained. Importantly, our empirical approach allows us to disentangle and quantify the contribution of both horizontal and vertical relations on firms' exposure to  aggregate shocks. Our baseline downstream amplification effect corresponds to roughly 60% of the horizontal amplification  documented in the literature. We find stronger impacts of downturns when: (i) suppliers are more constrained; (ii) firms depend more on specific inputs; and (iii) suppliers are more concentrated. The effects are attenuated or muted at high levels of downstream firms' accounts payable and upstream firms' accounts receivable, suggesting trade credit as a mechanism through which the downstream channel operates. Our findings uncover two network implications of financing constraints: a more severe contagion of negative shocks through supplier-customer links and an amplification of downstream industries' aggregate valuation losses. Our results lend support to policies that facilitate trade credit in upstream segments during crises.