diff --git a/.github/workflows/workspace_snippet.sh b/.github/workflows/workspace_snippet.sh
index 8fc3f57..37e7e11 100755
--- a/.github/workflows/workspace_snippet.sh
+++ b/.github/workflows/workspace_snippet.sh
@@ -34,7 +34,7 @@ rules_swc_dependencies()
 load("@aspect_rules_swc//swc:repositories.bzl", "swc_register_toolchains")
 swc_register_toolchains(
     name = "swc",
-    swc_version = "v1.2.118",
+    swc_version = "v1.2.168",
 )
 
 # Fetches a NodeJS interpreter, needed to run the swc CLI.
diff --git a/WORKSPACE b/WORKSPACE
index 19e7f82..2e1d057 100644
--- a/WORKSPACE
+++ b/WORKSPACE
@@ -16,7 +16,7 @@ load("//swc:repositories.bzl", "swc_register_toolchains")
 
 swc_register_toolchains(
     name = "default_swc",
-    swc_version = "v1.2.141",
+    swc_version = "v1.2.168",
 )
 
 load("@rules_nodejs//nodejs:repositories.bzl", "nodejs_register_toolchains")
diff --git a/examples/transitive/BUILD.bazel b/examples/transitive/BUILD.bazel
new file mode 100644
index 0000000..1d2f9ac
--- /dev/null
+++ b/examples/transitive/BUILD.bazel
@@ -0,0 +1,21 @@
+"""Test transitive dependencies between typescript files
+which are transpiled separately as "libraries" but which
+have runtime dependencies.
+"""
+
+load("@aspect_bazel_lib//lib:write_source_files.bzl", "write_source_files")
+
+genrule(
+    name = "run",
+    outs = ["actual"],
+    cmd = "$(location //examples/transitive/app:bin) > $@",
+    tools = ["//examples/transitive/app:bin"],
+)
+
+# Assert the output of the program matches the expected file
+write_source_files(
+    name = "assertion",
+    files = {
+        "expected": "actual",
+    },
+)
diff --git a/examples/transitive/app/BUILD.bazel b/examples/transitive/app/BUILD.bazel
new file mode 100644
index 0000000..db77214
--- /dev/null
+++ b/examples/transitive/app/BUILD.bazel
@@ -0,0 +1,24 @@
+load("@aspect_rules_swc//swc:swc.bzl", "swc")
+load("@aspect_rules_js//js:nodejs_binary.bzl", "nodejs_binary")
+
+package(default_visibility = ["//:__subpackages__"])
+
+swc(
+    name = "app",
+    srcs = ["a.ts"],
+    args = [
+        "--config",
+        "module.type=commonjs",
+    ],
+    # In Bazel, a "data" dependency is a runtime dependency.
+    # This file isn't required to transpile b.ts -> b.js
+    # however any program which depends on lib_b should have
+    # lib_c available in the "runfiles".
+    data = ["//examples/transitive/lib_b"],
+)
+
+nodejs_binary(
+    name = "bin",
+    data = [":app"],
+    entry_point = "a.js",
+)
diff --git a/examples/transitive/app/a.ts b/examples/transitive/app/a.ts
new file mode 100644
index 0000000..30851ea
--- /dev/null
+++ b/examples/transitive/app/a.ts
@@ -0,0 +1,3 @@
+import { b } from "../lib_b/b";
+
+console.log("output of app:", b);
diff --git a/examples/transitive/expected b/examples/transitive/expected
new file mode 100644
index 0000000..97a3814
--- /dev/null
+++ b/examples/transitive/expected
@@ -0,0 +1 @@
+output of app: 3
diff --git a/examples/transitive/lib_b/BUILD.bazel b/examples/transitive/lib_b/BUILD.bazel
new file mode 100644
index 0000000..7132210
--- /dev/null
+++ b/examples/transitive/lib_b/BUILD.bazel
@@ -0,0 +1,17 @@
+load("@aspect_rules_swc//swc:swc.bzl", "swc")
+
+package(default_visibility = ["//:__subpackages__"])
+
+swc(
+    name = "lib_b",
+    srcs = ["b.ts"],
+    args = [
+        "--config",
+        "module.type=commonjs",
+    ],
+    # In Bazel, a "data" dependency is a runtime dependency.
+    # This file isn't required to transpile b.ts -> b.js
+    # however any program which depends on lib_b should have
+    # lib_c available in the "runfiles".
+    data = ["//examples/transitive/lib_c"],
+)
diff --git a/examples/transitive/lib_b/b.ts b/examples/transitive/lib_b/b.ts
new file mode 100644
index 0000000..e4a14aa
--- /dev/null
+++ b/examples/transitive/lib_b/b.ts
@@ -0,0 +1,3 @@
+import { c } from "../lib_c/c";
+
+export const b = 2 + c;
diff --git a/examples/transitive/lib_c/BUILD.bazel b/examples/transitive/lib_c/BUILD.bazel
new file mode 100644
index 0000000..9bc63ef
--- /dev/null
+++ b/examples/transitive/lib_c/BUILD.bazel
@@ -0,0 +1,12 @@
+load("@aspect_rules_swc//swc:swc.bzl", "swc")
+
+package(default_visibility = ["//:__subpackages__"])
+
+swc(
+    name = "lib_c",
+    srcs = ["c.ts"],
+    args = [
+        "--config",
+        "module.type=commonjs",
+    ],
+)
diff --git a/examples/transitive/lib_c/c.ts b/examples/transitive/lib_c/c.ts
new file mode 100644
index 0000000..351d3e8
--- /dev/null
+++ b/examples/transitive/lib_c/c.ts
@@ -0,0 +1 @@
+export const c = 1;
diff --git a/swc/private/swc.bzl b/swc/private/swc.bzl
index 174f536..e75e3bd 100644
--- a/swc/private/swc.bzl
+++ b/swc/private/swc.bzl
@@ -163,10 +163,14 @@ def _impl(ctx):
                 ),
             )
 
+    # See https://docs.bazel.build/versions/main/skylark/rules.html#runfiles
+    runfiles = ctx.runfiles(files = outputs + ctx.files.data)
+    runfiles = runfiles.merge_all([d[DefaultInfo].default_runfiles for d in ctx.attr.data])
+
     providers = [
         DefaultInfo(
             files = depset(outputs),
-            runfiles = ctx.runfiles(outputs, transitive_files = depset(ctx.files.data)),
+            runfiles = runfiles,
         ),
     ]
 
diff --git a/swc/private/versions.bzl b/swc/private/versions.bzl
index eb19328..1dd009c 100644
--- a/swc/private/versions.bzl
+++ b/swc/private/versions.bzl
@@ -1,6 +1,21 @@
 "Mirror of release info"
 
 TOOL_VERSIONS = {
+    "v1.2.168": {
+        "android-arm-eabi": "sha384-eegQUZCJXBzl5Y4IeELJhlVGAUkspDA6cIqHJxEY6nSMRsJ5azxPAYHPMjd/7HcB",
+        "android-arm64": "sha384-iDGIuT+rMBqEFXynqgqUCEwaEysPNHPgU5zHVrw0ZoTBmbgU7hE/bDI6qtwEuhGB",
+        "darwin-arm64": "sha384-cC7J5IXEiivWG9fLk70P3/eR3xlC9c6pEQ7eDSLEbUPayV9dzd2sfL6zJNAVzJke",
+        "darwin-x64": "sha384-cdoeWiAiFuC6trXvaOIKHaghIOgGjE8FYU+ApLIX10uuASykH0KBUls8YzI/z0BF",
+        "freebsd-x64": "sha384-i/sWnzLH7iq73TnVt0Gc7N1jllFITcKp14PIEB/GPuR2XfH5Lta6N2AtAHlIRJj6",
+        "linux-arm-gnueabihf": "sha384-JAMYCgrMEUFVmDdXSjJJCnaatsyQ3PXB1UwlGwZ3ggXx3TQ8q6zUjXPcaWPMPDdd",
+        "linux-arm64-gnu": "sha384-6vN8ks/3LXz1y1Vlt99MZTpieafcdy1E+Umd8Al3v/dPECuhq9r+nOseFzNBCYwK",
+        "linux-arm64-musl": "sha384-jJhVdadlEqOIKadZBzlMue1t8YYNJ/kdsdbUt0UM+gc6Zbp1DJr1oai3maH6lvTc",
+        "linux-x64-gnu": "sha384-Of6s4gjX/7JGFpReGFG0lozDS6i7AJcJ3xBOEoYvAo33dXakrg+NTOORTtUvyHQS",
+        "linux-x64-musl": "sha384-c537PkbC8nkaQP+lMkKWjUZ1Xl2qpCnDW5tc1SMRb1SGgLWuSj4AZ1GjmT5CFVV9",
+        "win32-arm64-msvc": "sha384-inYv8Ad8efI6sT5nZ9dlGq0aeaBIzo8S2ZcG8MafsdipilHazxm/BYdQWZTsazAP",
+        "win32-ia32-msvc": "sha384-3Sxwt0BN2W7N/xei9wcONc6MQbEQo9EcnfoeO+pNBGR1e4t0QVAVufpzK4G+ZDHs",
+        "win32-x64-msvc": "sha384-HJKPVPvKu6nWu6vdXrnVK5ClFoKA7pM1C4fgiQ2eBt0N/syTzD9HRGbB24s1Ru3B",
+    },
     "v1.2.141": {
         "android-arm-eabi": "sha384-1Kpl5sj2A50yTtZu5Ae7rGGY+t+0FYvcy/VCUp1IM8lW36RuhERqfahcWdmgtinB",
         "android-arm64": "sha384-F/kmewGo2LlmyIeEQBnctRBJULmcSbko/5Gz1AJNxATWS1JUEX8C06AhdTpV7dk0",