Trump Takes Shot at China Through Vietnam: 40% Tariffs Ready to Be Imposed!
President Donald Trump has just announced a two-tier trade deal with Vietnam that explicitly targets a loophole that China often exploits to avoid US tariffs. The deal imposes a 20% tariff on official Vietnamese exports, and a 40% levy on goods deemed to have merely ‘transited’ or laundered from China through Vietnam. The move comes as the July 9 deadline for partner countries to finalize trade deals with the US approaches.
What’s behind the tariffs? Since the trade war began in 2018, many Chinese companies have moved their factories to Southeast Asia, including Vietnam. Items like AirPods, smartphones, and other electronics are now assembled in Vietnam, but using components from China. While legally not a violation, the Trump administration wants to curb the practice with stricter rules of origin. However, until now, the “Made in Vietnam” assessment mechanism has not been explained in detail.
According to economists, the impact could be quite significant depending on how the tariffs are implemented. Roland Rajah, an economist at the Lowy Institute in Australia, said that if the approach is too harsh, the tariffs could harm Vietnam, China and even US consumers themselves because they have to pay higher import prices. On the other hand, Pham Luu Hung from SSI Securities in Vietnam assessed that transit goods are not a major contributor to Vietnam's economy, so the impact could be limited.
What's next? The rules of origin are still being negotiated between the US and Vietnam. Hung emphasized that this rule could have a greater impact than the tariffs themselves, because it will determine whether certain goods are subject to a 20% or 40% burden. With this uncertainty, market players are still waiting to see how the concrete implementation will be in the next few weeks, especially ahead of the July 9 trading deadline.
Source: (ayu-newsmaker)
