For Professor Pham Tat Thang, senior researcher at the Trade Research Institute at the Ministry of Industry and Trade, it seems as though no one will win in the US-China trade war, neither the two nations involved nor the world’s economy.
First of all, this war is threatening the global economy as it goes against the global trend towards trade liberalisation and triggers the rise of protectionism. It could result in a global economic slowdown and impact Vietnam’s economy in a bad way, Thang explained.
Chinese products and projects will not be allowed to make their way into the US like before so Chinese government and enterprises are likely to find alternatives for them in neighbouring markets like Vietnam, he noted.
Once Chinese exports scale down, reducing its liquidity, demand for imports in China will also decline. This, together with China’s escalation of trade barriers, could hurt Vietnam’s exports to the neighbouring country, which have experienced upturn in recent years, according to the researcher.
However, Chinese products hit by high tariffs will lose their competitive edge in the US, opening the doors for similar goods from Vietnam. Hence, if Vietnam can make the most of the situation, it could turn challenges into opportunities.
On the other hand, Thang warned that Chinese exporters are likely to try to find a way around to disguise their origin of goods to avoid the US tariffs. They could fake that their products are originating in Vietnam, he said.
“If we don’t stay on watch and this happens, it will harm the Vietnam-US trade relations as well as national interests in the long run,” he added.
The economist urged Vietnamese enterprises to be aware of technical trade barriers in each foreign market as well as to stay up to date in related regulations in order to survive the turmoil of protectionism in the global trade.
As foreign countries are raising trade barriers, domestic firms must be updated on the changes to be able to satisfy new requirements, he suggested. They should also cooperate with each other to protect themselves and prevent violations occuring, he noted.
The trade war between the US and China officially commenced on July 6 after the US pulled the trigger on 25% duties on approximately US$34 billion worth of Chinese machinery, electronics, and high-tech equipment imports.
This is only Washington’s first step in a trade confrontation that is likely to hurt not only the economies of the US and China, but also threaten global economic instability. Vietnam is also set to become embroiled in the conflict as both the US and China are important trade partners for the country.
Last year, China was the largest trade partner of Vietnam. The bilateral trade between the two sides was estimated at US$93.8 billion, of which exports to China reached US$35.3 billion, up 60.6% year-on-year, and imports from China totalled US$58.5 billion, up 16.9% year-on-year.
Vietnam’s trade deficit with China was US$23.3 billion, down 17.4%.
The US ranked third in bilateral trade with Vietnam with US$50.7 billion, of which export values hit the highest level of US$41.5 billion, a year-on-year increase of 8%, and import values stood at US$9.1 billion, up 4.9%.