The Effects of the United States-China Trade War During the COVID-19 Pandemic on Global Supply Chains: Evidence from Viet Nam

Anh Dang and Ngoc Anh Tran
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Ngoc Anh Tran: Indiana University Bloomington

No DP-2023-11, Working Papers from Economic Research Institute for ASEAN and East Asia (ERIA)

Abstract: The trade war between the United States (US) and China has affected their bilateral trade as well as that with other countries. This study investigates how Vietnamese firms performed during the COVID-19 pandemic under the shadow of this trade war. The change in the log of Vietnamese exports to the US from 2017 to 2020 is used to measure the impact of the trade war, and the change in the log of Chinese exports to the US is then used as an instrument for the Vietnamese export change during the same period. It is found that firms that faced more trade war exposure increased their investment, profit, and value added, which may be due to the market exit of unproductive firms. Moreover, the trade war impact is more pronounced for large firms. Foreign-invested firms gained less from trade war exposure. The pandemic weakened the trade war effect on firm performances; however, it exacerbated the trade tension effect on foreign-trade firms.

Keywords: Trade diversion; Trade war; Pandemic (search for similar items in EconPapers)
JEL-codes: F14 F16 R23 (search for similar items in EconPapers)
Date: 2023-08-29
New Economics Papers: this item is included in nep-cna, nep-int and nep-sea
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