Vietnam's growing trade surplus with the United States is heavily dependent on imports from China, according to recent data analyzed by Reuters. As the U.S. ramps up tariffs to curtail trade with China, it has significantly increased imports from Vietnam. However, Vietnam relies on China for a substantial portion of its exports to the U.S.
World Bank data and insights from economic experts reveal that the value of China’s exports to Vietnam nearly mirrors the value of Vietnam’s exports to the U.S. In 2023, the U.S. imported over $114 billion worth of goods from Vietnam, more than double the amount in 2018, when U.S.-China trade tensions began. This surge occurred as U.S. imports from China decreased by $110 billion.
Hung Nguyen, a supply chain expert at RMIT University Vietnam, noted that in key sectors like clothing and electronic equipment, "Vietnam captured more than 60 percent of China's loss." However, much of Vietnam’s exports to the U.S. consist of parts and components manufactured in China.
The Asian Development Bank estimates that in 2022, imported parts constituted 80 percent of the value of Vietnam's electronic exports. Similarly, the Organization for Economic Co-operation and Development reported that in 2020, 90 percent of goods imported by Vietnam's electronics and clothing industries were re-exported, a figure significantly higher than the average in industrialized nations.
In early 2024, U.S. imports from Vietnam totaled $29 billion, while Vietnam's imports from China amounted to $30.5 billion. Darren Tay, lead economist at BMI, remarked, "The surge in Chinese imports in Vietnam coinciding with the increase in Vietnamese exports to the U.S. may be seen by the U.S. as Chinese firms using Vietnam to circumvent the additional tariffs imposed on their goods." This could potentially lead to tariffs against Vietnam after the U.S. presidential elections.
Currently, Vietnam holds the fourth-largest trade surplus with the U.S., trailing only China, Mexico, and the European Union. This trade imbalance is notable as Vietnam seeks “market economy” status from the United States, amidst efforts by President Joe Biden to strengthen diplomatic ties.
The U.S. Embassy in Hanoi declined to comment on the trade imbalance, and Vietnam's foreign and trade ministries, as well as China's commerce ministry, did not respond to requests for comments from Reuters.
Investment in Southeast Asia is on the rise, with companies relocating activities from China and many Chinese firms establishing new factories in Vietnam, still reliant on Chinese supplies. Following a 2023 investigation, the U.S. Commerce Department identified instances of Chinese-made solar panels being labeled as “Made in Vietnam” to avoid tariffs.
Additionally, Vietnam's involvement in the Xinjiang region of China has drawn U.S. attention. The U.S. bans imports from Xinjiang due to alleged human rights abuses against the Uyghur minority. Xinjiang is a major producer of cotton and polysilicon, both critical to Vietnamese industries. Last year, Vietnam’s clothing and solar panels, influenced by the Xinjiang ban, accounted for about nine percent of its exports to the U.S.
The Biden administration has so far remained silent on Vietnam's large trade surplus, but experts predict this may change after the upcoming November elections.
Nguyen Ba Hung, an economist at the Asian Development Bank, suggested that policy towards Vietnam might shift depending on the election outcome, though such changes could also increase U.S. import costs.
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