Dynamic Impacts of U.S. Demand Shocks on Mexican and Vietnamese Exports to the United States: A Comparative Analysis Based on a VAR Model

Abstract

Amid U.S.–China trade tensions and pandemic-era disruptions, we compare how U.S. demand shocks affect Mexico’s and Vietnam’s exports to the United States. Using matched-frequency quarterly data, we estimate a bivariate VAR for each country with U.S. GDP (external demand proxy) and exports to the U.S., and assess dynamics via Granger tests, impulse responses, and forecast-error variance decompositions. Mexico shows a rapid and statistically significant export response to positive U.S. demand shocks, with effects peaking within a few quarters and non-trivial medium-horizon contributions in the FEVD. Vietnam’s responses are small and mostly insignificant, and U.S. demand explains little of its near- to medium-term export variance. These side-by-side results derived under a unified identification and frequency document heterogeneous demand sensitivity consistent with near-/friend-shoring stages: tighter U.S.–Mexico supply chain coupling versus Vietnam’s capacity- and organization-driven dynamics. The evidence informs policies to stabilize external-trade growth and calibrate upgrading paths in different integration settings.