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Fishing in Troubled Waters: The Impact of the US-China Trade War on Vietnam

Author

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  • PHAM PHUONG NGOC

    (Diplomatic Academy of Vietnam, Hanoi, Vietnam)

  • DAINN WIE

    (National Graduate Institute for Policy Studies, Tokyo, Japan)

Abstract

We study whether Vietnam’s export surge during the 2018–2019 U.S.–China trade war was driven by trade diversion using product- and firm-level microdata. U.S. import data show sharp increases in Vietnamese exports of tariff-targeted products, while Vietnam’s imports of the same products from China rise only modestly, indicating substantial diversion and limited detour. Using industry exposure based on U.S. tariff differentials between China and Vietnam, firm fixed-effects estimates show that more exposed firms enter exporting and expand export volumes, especially in industries reliant on Chinese inputs. Exposed firms also increase investment to expand production capacity, consistent with trade diversion.

Suggested Citation

  • Pham Phuong Ngoc & Dainn Wie, 2025. "Fishing in Troubled Waters: The Impact of the US-China Trade War on Vietnam," GRIPS Discussion Papers 23-06, National Graduate Institute for Policy Studies.
    • Handle: RePEc:ngi:dpaper:23-06
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    Cited by:

    1. Kazunobu Hayakawa & Sasatra Sudsawasd, 2025. "Trade Effects of the US–China Trade War on a Third Country: Preventing Trade Rerouting From China," The World Economy, Wiley Blackwell, vol. 48(10), pages 2333-2343, October.
    2. Hayakawa, Kazunobu & Sudsawasd, Sasatra, 2025. "Impacts of trade diversion from China in the United States market on wages in a third country: Evidence from Thailand," International Economics, Elsevier, vol. 183(C).
    3. Pham Phuong Ngoc & Dainn Wie, 2023. "Impact of the US-China Trade War on Vietnam’s Labor Market," GRIPS Discussion Papers 23-09, National Graduate Institute for Policy Studies.
    4. Garred, Jason & Yuan, Song, 2025. "Relocation from China (with Chinese characteristics)," Journal of Development Economics, Elsevier, vol. 176(C).

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