US – China Trade War Risks Raising China - Vietnam Trade Deficit, Experts Say

Diep Nguyen

15:36 15/05/2019

BizLIVE -

The US – China trade war mainly targets the industrial products but at the same time the trade deficit that Vietnam has with China new mainly in terms of industrial products.

US – China Trade War Risks Raising China - Vietnam Trade Deficit, Experts Say

Photo: Bloomberg

Recently, the US government officially imposed 25% tax on all kinds of imported products from China. Right after that, BIDV released a report analyzing the impacts of US tarriffs on Vietnam’s economy.
In terms of trade, it is highly recommended to analyze carefully the list of products that China exports that have to bear the 25% tax. Some mainstream products of Vietnam can benefit from the new tax that US applied. Mainly they are consumer products (textiles, shoes, seafood, agricultural products, wooden furniture, mobile phones and parts).
Other production inputs like industrial goods, steels are the products that have to bear the 25% tax. However, current Vietnam’s export of those products account for the very low percentate of total import into US.
That means some kind of Vietnamese products can enjoy the benefits of higher exports. However, Vietnam companies should be more active in order to find the advantages and changces to get the market share. What is more, it is necessary to improve structurally and raise competitive advantage.
But also according to BIDV Research, the heightened trade tension can affect the total trade demand then the gross demand for good will go down.
Furthermore, with the very high tarriffs, the import prices from each country can increase, prices of products from those countries will be higher.
Productions inputs will become more expensive thus lead to higher production costs for both companies and consumers and create more inflation pressure for Vietnam.
Thirdly, because of geological proximity, the products that can not be exported into China will change ways to other markets, including Vietnam.
The US – China trade war mainly targets the industrial products but at the same time the trade deficit that Vietnam has with China new mainly in terms of industrial products. In this case, when US – China trade war escalates, there is high possibility that China will export more industrial products to Vietnam.

DIEP NGUYEN

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