Trump’s ‘Liberation Day’ Tariffs
Countries are preparing for US President Donald Trump’s so-called ‘Liberation Day in America!!!’ Significant tariffs on trading partners are expected. This move follows taxes imposed on foreign carmakers, with Vietnam potentially being a target due to its large trade deficit with the US and its role in relocating factories from China. Despite some nations retaliating, Vietnamese Prime Minister Pham Minh Chinh suggests diplomacy over conflict. Chinh even offered to golf with Trump for the benefit of his nation.
Vietnam, known for its ‘bamboo diplomacy,’ has been mindful in its engagement with Washington amid concerns over China’s influence. However, its trade efforts may not be enough to fully avoid the impact of Trump’s levies. Vietnam’s economic policies have benefited from the US-China trade tensions, leading to an increase in exports to the US, partly due to a Chinese manufacturing shift.
Vietnam’s position is also nuanced by its significant economic ties with China, both as a supplier and for investments. This relationship raises concerns for Trump. The US remains Vietnam’s top export destination, but China supplies a substantial portion of Vietnam’s imports. Chinese firms also contribute to Vietnam’s new investments. This dynamic could lead to Vietnam facing hard tariffs in the future.
Additionally, Vietnam has lowered tariffs on selected US goods and permitted SpaceX operations, which may be a strategic move to mitigate potential tariffs. However, tariffs could still significantly affect US businesses that shifted production to Vietnam from China, such as tech giants and sportswear manufacturers.
For Vietnam, managing the trade relationship with the US under these tariff discussions will be a huge test. It must balance its ties to China with the need to avoid US tariffs. The Vietnamese approach to ‘bamboo diplomacy’ and possible golf diplomacy with Trump may only go so far in securing special treatment. The outcome will become clearer when the new tariffs are implemented next week.
