When two large economies tax each other's goods, who else gains?
The US-China Trade War and Global Reallocations
Pablo Fajgelbaum et al. (2024) · American Economic Review: Insights 6(2)
Article ↗ · Replication data ↗ (openICPSR)
The archive requires an account we do not hold, so the files were not opened. What follows rests on the published abstract and on this platform's own observations.
What the authors found
Fajgelbaum, Goldberg, Kennedy, Khandelwal and Taglioni find the US-China trade war created net export opportunities rather than merely diverting existing trade. Bystander countries grew exports of the taxed products to the rest of the world, not only to the United States. The variation between those countries was driven by country-specific tariff elasticities and the slope of their supply curves, not by what they happened to specialise in.
What our data adds
IMF bilateral trade records the reallocation plainly. Comparing 2017, the year before the tariffs, with 2024: Vietnam's goods exports to the United States rose from 41.5 billion dollars to 119.4 billion, an increase of 187 per cent. Mexico rose 57 per cent, from 326.9 billion to 512.7 billion, and India 76 per cent. China's exports to the United States rose 21 per cent over the same seven years, so this is not a story of China shrinking — it is a story of everyone else growing faster into the same market.
Bystander economies alongside China. The note's 2017-2024 comparison is in the table below; this shows where each stands now.
| Figure | Value | Indicator |
|---|---|---|
| Vietnam exports to the US, 2017 | 41.5bn USD | IMTS.XG_FOB_USD.A |
| Vietnam exports to the US, 2024 | 119.4bn USD | IMTS.XG_FOB_USD.A |
| Vietnam, change | +187% | IMTS.XG_FOB_USD.A |
| China exports to the US, same period | +21% | IMTS.XG_FOB_USD.A |
Every figure here is computed from observations in this database and can be charted, downloaded or queried.
What this cannot show
A bilateral total cannot separate the tariffed goods from the untariffed, which is the distinction the paper is built on. Nor can it distinguish genuine new production from transshipment: a Chinese good finished in Vietnam and shipped onward appears here as a Vietnamese export, and several studies since have argued that rerouting accounts for a substantial part of exactly this increase. The paper's central claim, that net opportunities were created rather than trade merely diverted, needs the product-level tariff variation it uses and cannot be tested from these aggregates.
The data behind it
Related notes
- When a country exports, how much of the value was actually made there — and how far does the usual export statistic mislead us?
- Who actually paid for the 2018 US tariffs, and what did they do to the pattern of trade?
- When two countries trade with each other and neither is the United States, whose currency is the price in?