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The Growth Lab's Research Seminar series is a weekly seminar that brings together researchers from across the academic spectrum who share an interest in growth and development.

Speaker: Ebehi Iyoha, Assistant Professor of Business Administration

About the Speaker: Ebehi Iyoha is an Assistant Professor in the Entrepreneurial Management Unit at Harvard Business School. Her research interests lie at the intersection of industrial organization and international trade. Using a combination of structural and reduced-form methods, her work examines the economic significance of interfirm networks and how they impact firm performance through productivity and trade. Professor Iyoha earned her PhD in Economics from Vanderbilt University in 2021 and worked as a Research Economist at the Federal Reserve Bank of Boston prior to joining HBS.

Paper Abstract: This paper introduces a new measure of tariff evasion through rerouting and applies it to the 2018 U.S.–China trade war, focusing on Vietnam as a transit country. We use transaction-level trade data and define rerouting as the flow of a granular eight-digit HS product from China, through Vietnam, to the United States within a given quarter. We consider several levels of geographic aggregation – country, province, and firm – which yield increasingly conservative estimates of rerouting. To examine how rerouting responded to the trade war, we exploit product-level variation in tariff exposure as well as the timing of tariff implementation. For the average product-level tariff increase, rerouting rises by 3.6 percentage points at the country level, 2.5 at the province level, and 1.4 at the firm level. These treatment effects represent a 21.1% increase in country-level rerouting, a 20.5% increase at the province level, and a 14.3% increase at the firm level compared to pre-trade war values. We also find that rerouting was largely driven by new establishments and Chinese-owned enterprises. Finally, our results indicate that the trade war raised revenue and profits among firms in Vietnam and altered their input composition in ways consistent with increased rerouting – specifically, reducing labor and increasing materials as a share of output.