How to Win a Trade War: Literature Review on the Success of Vietnam in U.S.- China Trade War (2018-2020)

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School of Business | Bachelor's thesis
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Date

2025

Department

Taloustieteen laitos

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Mcode

Degree programme

Bachelor’s programme in Economics

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en

Pages

21

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Abstract

Emerging economy China has drawn attention as its trade frictions with the United States escalated into a trade war between 2018-2020. This thesis examines how such conflicts affect third-party countries, with a focus on Vietnam’s gains contrary to the losses most nations faced. While tariffs and uncertainty normally harm global growth, they also create opportunities for countries able to capture diverted trade and foreign investment. This literature review uses macroeconomic trade theory and historical comparisons with the case of the U.S.-Japan trade disputes (1969-1995) to demonstrate how the benefits were not a coincidence but a matter of structural readiness. Factors such as institutional quality, sufficient infrastructure, geopolitical neutrality, and competitive labour market enables developing nations to find a place in reshaping global value chains. This was the case for Vietnam who had comparative advantage in especially integrating these in a coherent manner compared to most ASEAN peers. The findings show that trade diversion is a recurring matter, yet the benefits from the scenarios are uneven, and how long/short-term reforms and policies turn global disruptions into sustained gains.

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Thesis advisor

Ozhegova, Alina

Keywords

comparative advantage, institutions, protectionism, retaliations, tariff, trade war

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https://urn.fi/URN:NBN:fi:aalto-202510268569

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[kand] Kauppakorkeakoulu / BIZ (Open Access)