China's President Xi Jinping (L) and US President Donald Trump attend a welcome ceremony at the Great Hall of the People in Beijing on November 9, 2017.

More than one year since the start of a trade war between Washington and Beijing, economists from Japanese investment bank Nomura found evidence that the U.S. and China — in order to avoid elevated tariffs — have cut down importing certain goods from each other.

Instead, importers in the two countries have been sourcing for the same products from alternative locations not targeted by tariffs, the economists said in a report outlining their findings. Vietnam has so far emerged as the largest beneficiary of that diversion in trade flows, gaining an estimated 7.9% of its gross domestic product from those new business, according to Nomura.

"As tit-for-tat tariff hikes between the US and China increase, so does the cost of importing from each other," the economists wrote in the report dated June 3.

"Some exporters in the US and China may be willing to absorb part of the additional tariff costs in their profit margins, and some multinationals could opt to re-shore production, but the trade literature shows that, over time, the largest response is likely to be trade diversion," they added.