Trade Effects of the US –China Trade War on a Third Country: Preventing Trade Rerouting From China

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 market. This initiative mandates exporters to submit additional documents for thorough verification of the origin of goods. We empirically investigate the impact of this initiative on Thailand's exports to the US, as well as its imports from China. The analysis utilises 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 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. However, results indicate that the implementation of surveillance using the watchlist does not decrease exports to the US and imports from China.