The Urban Consequences of Production Relocations in Asia - MIT Center for Real Estate
Asia Real Estate Initiative

The Urban Consequences of Production Relocations in Asia

map of changing supply chains in SE Asia
Principal Investigators: Siqi Zheng (lead)
Researchers: Matthew Kahn, Wen-Chi Liao
Year: 2024
Sponsor: Center for Real Estate
Topics: International Real Estate, Real Estate Development and City-making, Real Estate Finance and Investment, Urban and Real Estate Economics
  • Theme 1: The Urban Consequences of Production Relocations in Asia
    • Sub-Theme 2: Urban and environmental consequences of supply chain relocations under US-China Trade War

Tariff Wall Jumping at the China-Vietnam Border

How has the US-China Trade War and resulting tariffs influenced the economic geography of Vietnam?


The Trump Administration’s tariffs created a wedge between mutually beneficial trades between China’s producers and US consumers. Moving production to nearby Vietnam allows firms to jump the tariff wall. Locations within Vietnam differ in their proximity to China, industrial mix, and existing transport infrastructures such as roads, rails, and ports. We exploit these heterogeneous location attributes to explore Vietnam’s new emerging economic geography induced by the US/China Trade War. Using data from 2015 to 2021 on Vietnamese cities and provinces, we conduct a Bartik shift-share analysis to study the effects of the S310 China tariffs. Locations within Vietnam closer to China gain more—a border effect—in output and new FDI, particularly for industries producing goods with strong demand from the US and larger S301 tariff increase for China exports. A multiplier effect benefits the local sector, evidenced by retail sales. The border effect relates to global-value-chain restructuring and manufacturing reallocation. 

Related Projects

  1. The US-China Trade War: Quantify the Negative Shocks to Local Housing Markets and Land-Based Finance in Chinese Cities
  2. New Cities as Economic Engine
  3. Toward Urban Economic Vibrancy: Patterns and Practices in Asia’s New Cities

The Urban Consequences of Production Relocations in Asia