Trade Effects of the US–China Trade War on a Third Country: Preventing Trade Rerouting from China

Kazunobu Hayakawa and Sasatra Sudsawasd

No 916, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: ASEAN countries might function as transshipment platforms for Chinese exports, enabling the evasion of US tariffs imposed on China in the US–China trade war. In response, in November 2019, the Thai government established a watchlist for high-risk products destined for the US and European Union (EU) markets. This initiative mandates exporters to submit additional documents for thorough verification of the origin of goods. We empirically investigate the impact of placing products on Thailand’s exports to the US and EU, as well as its imports from China. The analysis utilizes monthly trade data for Thailand from January 2017 to April 2023. One empirical challenge is the potential presence of reverse causality, in which products experiencing higher export growth to the US or EU may be deliberately selected for inclusion in the watchlist. To address this concern, we focus exclusively on products that meet the criteria for inclusion in the surveillance lists. Results indicate that the implementation of surveillance using the watchlist leads to a decrease in exports from Thailand to the EU. In contrast, exports to the US increased. Moreover, this initiative does not significantly impact China’s imports to Thailand.

Keywords: US–China; disputes|Trade; rerouting|Thailand (search for similar items in EconPapers)
JEL-codes: F15 F53 (search for similar items in EconPapers)
Date: 2024-01
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Published in IDE Discussion Paper = IDE Discussion Paper, No.916. 2024-01

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