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American corporations are urging Washington to decrease tariffs on Vietnam, arguing that the south-east Asian nation has change into a significant a part of their “China plus one” diversification technique.
Vietnam was one of many greatest winners from US President Donald Trump’s commerce struggle in his first time period as producers shifted from China. Apple, Intel and Nike are amongst American corporations that rely closely on Vietnam.
Because of that manufacturing shift, the south-east Asian nation’s commerce surplus with the US ballooned, crossing $125bn final yr and rating third after China and Mexico. The Trump administration imposed a 46 per cent tariff on Vietnam in April — one of many highest after China — earlier than pausing the levy pending commerce negotiations.
The American Chamber of Commerce in Hanoi, whose members embrace the Vietnamese subsidiaries of massive buyers reminiscent of Apple, urged that the transfer could possibly be counter to US strategic pursuits in south-east Asia, the place it has been making an attempt to diversify away from China.
“Vietnam has emerged as a valued partner of the United States in the context of diversifying supply chains,” the chamber stated in a letter despatched to officers within the US and Vietnam, based on a replica obtained by the FT. Whereas the letter didn’t point out China, it added: “We urge the US government to consider this deficit trend as evidence of President Trump’s success during his first term in diversifying supply chains in the Indo-Pacific region. We urge the US to avoid retaliatory and sectoral tariff measures against the logical outcome of its own policy goals.”
The tariffs are a “critical issue” for US companies in Vietnam as larger charges would “negatively affect our members’ businesses and customers, and the broader commercial relationship between our two countries”, the chamber stated.
Vietnam is essential to the availability chains of a number of American corporations. It accounts for half of footwear manufacturing of Nike, which now plans to lift costs due to the tariffs. Analysts count on Apple to supply two-thirds of AirPods from Vietnam by the top of the yr.
The lobbying by American corporations comes as international locations around the globe rush to finalise a cope with the US earlier than the 90-day pause on tariffs ends on July 9. US and Vietnamese officers are set to fulfill for a 3rd spherical of talks by mid-June, based on Hanoi.
A 46 per cent tariff could be devastating for Vietnam’s financial system because the US accounts for practically a 3rd of its complete exports. It could additionally have an effect on new international investments coming into Vietnam.
Vietnam has promised to purchase extra American merchandise, together with Boeing planes and liquefied pure fuel, and take away non-tariff obstacles for US corporations. It just lately accredited a Trump Group golf challenge and hosted Eric Trump for talks on a brand new Trump Tower in Ho Chi Minh Metropolis — in strikes that observers consider would assist Vietnam in commerce negotiations.
However one of many greatest stress factors from the US is on alleged trans-shipment of Chinese language items via Vietnam, which has in current weeks vowed to extend scrutiny of such practices.
In a Senate listening to this week, commerce secretary Howard Lutnick stated that even when Hanoi eliminated all tariffs and non-tariff obstacles on American merchandise, Washington wouldn’t carry its personal levies on Vietnam because the nation was a conduit for Chinese language items seeking to keep away from punitive US tariffs.
“They buy $90 billion from China, then they mark it up and send it to us,” Lutnick stated. “They are just a pathway of China to us.”
Vietnamese officers stated this week they have been responding with “determination and goodwill” to points raised by the US in commerce negotiations. Commerce information this week may add additional stress on Vietnam. Hanoi’s surplus with Washington surged to the second highest in April, overtaking Mexico, based on US information. Vietnamese information confirmed that its Might exports to the US continued to rise.
Within the letter despatched to the 2 governments, Amcham urged co-operation between customs authorities in Vietnam and the US to handle unlawful trans-shipment — an concept that individuals aware of the matter say is into account by each governments.
It additionally urged Vietnam to fast-track purchases of American merchandise and introduce reforms in some sectors. The chamber really helpful the “full liberalisation” of Vietnam’s energy sector to draw investments.
“This would spur Vietnamese imports of American turbines, LNG facilities and fuel, wind infrastructure equipment, batteries, and services in financing, construction and engineering,” which the chamber stated would handle the commerce imbalance.
