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Trade diversion and labor market adjustment: Vietnam and the U.S.-China trade war

Year: 2026

Type: article

Abstract: This paper investigates the effects of the U.S.-China trade war on labor market outcomes in a third country, Vietnam. We exploit variation in the extent of U.S. tariff hikes on Chinese imports across industries as well as pre-existing industry employment patterns in Vietnam. We find that Vietnamese individuals and districts that are more exposed to the trade war experience higher employment and lower informal employment in traded industries. Our findings reveal that bilateral trade policy can substantially affect labor markets in third countries.

Source: European Economic Review

DOI: 10.1016/j.euroecorev.2026.105282

Authors: Karin Mayr-Dorn, Gaia Narciso, Duc Anh Dang, Hien Phan

Institutions: Johannes Kepler University of Linz, Trinity College Dublin

Language: English

Topic: Global trade and economics

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: hybrid

Estimated APC paid: $3,690