Vietnam is proactively seeking to address Washington’s concerns regarding the circumvention of duties on Chinese goods through its territory in a move that believes to ease Trump’s anger.
As per a report by Reuters, Vietnam, in a bid to avoid these tariffs, has offered to implement a crackdown on Chinese goods that are produced in Vietnam, which then proceed to being shipped to the U.S. and also an illicit transshipment that has “Made in Vietnam” labels. This offer comes at a time when senior U.S. officials, including White House trade advisor Peter Navarro, have voiced concerns about this practice. Navarro explicitly stated that China uses Vietnam to tranship to avoid the tariffs.
This move is part of a broader effort by Vietnam to appease the U.S., its largest export market and a key security partner, amidst a significant trade surplus. Despite offering concessions, Vietnam was recently hit with a 46% tariff, which has since been suspended for 90 days.
Following a meeting between a Vietnamese deputy prime minister and the U.S. Trade Representative, the two nations have agreed to commence trade talks. Vietnam is reportedly hoping to reduce the tariffs by about half or even lower, with U.S. officials hinting that this range is possible. Additionally, Vietnam’s government has publicly announced its intention to crack down on trade fraud.
Vietnam finds itself in a delicate position, needing to maintain its crucial trade relationship with the U.S. while also preserving ties with China, a major source of investment and a significant neighbour. Many multinational companies have adopted a “China plus one” strategy since Trump’s first term, establishing factories in Vietnam to mitigate exposure to Beijing. A significant portion of Vietnam’s exports to the West rely on Chinese-made inputs, and Chinese firms have also set up operations in Vietnam to serve American consumers. Official trade data reveals a close correlation between Vietnam’s imports from China and its exports to the U.S., suggesting a strong link. U.S. officials, however, allege that this indicates China’s use of Vietnam for tariff avoidance without substantial Vietnamese value addition.
In addition to tackling transhipment concerns, Vietnam is also tightening controls on sensitive goods transiting through its territory from the U.S. to China. Hanoi intends to implement stricter measures on the export of dual-use goods, such as semiconductors, which Washington has long been accusing Beijing of using for military purposes.
This initiative follows requests from major trading partners to minimise the unauthorised transfer of source technologies. The U.S. government considers leadership in areas like artificial intelligence a national priority and has been restricting China’s access to advanced U.S.-made chips. Vietnam is proposing new declaration and approval procedures for these products.
The announcement came just several hours after the Chinese government revealed Xi Jinping’s travelling schedule, which includes a visit to Vietnam, Malaysia and Cambodia next week.
