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

Author

Listed:
  • Duc Anh Dang

    (Central Institute for Economic Management, Viet Nam)

  • Ngoc Anh Tran

    (Indiana University Bloomington)

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.

Suggested Citation

  • Duc Anh Dang & Ngoc Anh Tran, 2023. "The Effects of the United States-China Trade War During the COVID-19 Pandemic on Global Supply Chains: Evidence from Viet Nam," Working Papers DP-2023-11, Economic Research Institute for ASEAN and East Asia (ERIA).
    • Handle: RePEc:era:wpaper:dp-2023-11
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    References listed on IDEAS

    as
    1. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    2. SUN Chang & TAO Zhigang & YUAN Hongjie & ZHANG Hongyong, 2019. "The Impact of the US-China Trade War on Japanese Multinational Corporations," Discussion papers 19050, Research Institute of Economy, Trade and Industry (RIETI).
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    More about this item

    Keywords

    Trade diversion; Trade war; Pandemic;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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