Reports
Discussion Papers
No.916 Trade Effects of the US–China Trade War on a Third Country: Preventing Trade Rerouting from China
by Kazunobu HAYAKAWA, Sasatra SUDSAWASD
January 2024
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
JEL classification: F15, F53
PDF available at http://hdl.handle.net/2344/0002000839
Please note that discussion papers are works in various stages of progress and most have not been edited and proofread and may contain errors of fact or judgment. Revised versions of these papers may subsequently appear in more formal publication series. The views expressed in this publication are those of the author(s). The IDE does not guarantee the accuracy of the data included and accepts no responsibility for any consequences arising from its use.