Tariffs On US Vietnam Trade Could be Good for China
Asia as a whole has been reeling from this week's tariff announcements as governments and manufacturers alike scramble for solutions and strategies to combat Donald Trump’s trade policies. Vietnam in particular has been vocal seeking to reach out to the US and reach some kind of agreement. Vietnam has emerged in recent years as a manufacturing powerhouse. Many corporations including American ones had been relocating to the southeast Asian country to take advantage of its cheap skilled labour force. In fact many manufactures once based it its historic adversary China had moved in Vietnam in recent years. In a surprising turn of events the latest US Vietnam trade tariffs could now benefit China.
American Vietnamese Relations
Due to the history of the two nations one would expect they had an adversarial relationship. In fact, this could not be further from the truth. Under Trump's predecessor Joe Biden the relationship had grown closer as both countries expanded their relations. Trump himself is a widely popular figure in the country. He is admired for his business successes and tough stance towards China. These facts were no help as they were subject to some of the highest tariff levels of 46%. Vietnam’s role as a middle man for Chinese manufactures attempting to skirt US tariffs contributed to this fact.
Vietnam has done its best to placate Trump and avoid the wave of tariffs. The communist party of Vietnam quickly reached out to Trump following the announcements seeking to reach a deal. Prime Minister Pham Minh Chinh has even promised to try to reduce Vietnam’s over 123 billion dollar trade deficit with the US. This includes plans to purchase more American military equipment.
China's Opportunity
The potential cracks in the US Vietnamese relationship presents an interesting opportunity for Vietnam's long time adversary China. China is set to seize the opportunity amidst the current turmoil, with President Xi Jinping scheduled to visit Vietnam, Malaysia, and Cambodia this month. Xi plans to present China as a reliable and steady partner, in contrast to the United States. By the end of his visit, a number of economic agreements are expected to be signed with these countries. Should the two countries not be able to resolve the issues US Vietnam trade issues could prove advantages for the world's second largest economy.
Sources
The Guardian - How Trump tariffs could push Vietnam into the arms of China
Reuters - Vietnam to buy US defence, security products to tackle trade gap
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