Monday, 20 May 2024


Analysis-As US hikes China tariffs, imports soar from China-reliant Vietnam By Reuters

Analysis-As US hikes China tariffs, imports soar from China-reliant Vietnam By Reuters

By Francesco Guarascio

HANOI (Reuters) – As the United States intensifies efforts to reduce trade with China by hiking tariffs, it has greatly boosted imports from Vietnam, which relies on Chinese input for much of its exports, data show.

The surge in the China-Vietnam-U.S. trade has vastly widened trade imbalances, with the Southeast Asian country last year posting a surplus with Washington close to $105 billion – 2.5 times bigger than in 2018 when the Trump administration first put heavy tariffs on Chinese goods.

Vietnam now has the fourth-highest trade surplus with the United States, lower only than China, Mexico and the European Union.

The increasingly symbiotic relationship emerges from trade, customs and investment data reviewed by Reuters from the United Nations, the U.S., Vietnam and China, and is confirmed by preliminary estimates from the World Bank and half a dozen economists and supply chains experts.

It shows that Vietnam’s export boom has been fuelled by imports from neighbouring China, with inflows from China almost exactly matching the value and swings of exports to the United States in recent years.

In preliminary estimates shared with Reuters, the World Bank reckons a 96% correlation between the two flows, up from 84% before Donald Trump’s presidency.

“The surge in Chinese imports in Vietnam coinciding with the increase in Vietnamese exports to the U.S. may be seen by the U.S. as Chinese firms using Vietnam to skirt the additional tariffs imposed on their goods,” said Darren Tay, lead economist at research firm BMI, noting that could lead to tariffs against Vietnam after U.S. elections.

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The growing trade imbalance comes as Vietnam seeks to obtain market economy status in Washington after President Joe Biden pushed to elevate diplomatic ties with its former foe.

At over $114 billion last year, U.S. imports of goods from Vietnam were more than twice as big as in 2018 when the Sino-American trade war began, which boosted the Southeast Asian nation’s appeal among manufacturers and traders who sought to reduce risks linked to China-U.S. tensions.

That surge accounted for more than half the $110-billion drop since 2018 in imports from Beijing, U.S. trade data show.

In key industries such as textiles and electric equipment, “Vietnam captured more than 60% of China’s loss,” said Nguyen Hung, a specialist in supply chains at RMIT University Vietnam.


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