Thailand
Potential risks and gains for Vietnam from US tariffs on steel and aluminum
The Hanoitimes – The decision of US President Donald Trump on March to impose import tariffs of 25% on steel and 10% on aluminum comes with both potential risks and gains for Vietnam, experts said.
The new tariffs once effective will be applied to 12 countries including Vietnam instead of the current 0%.
According to Pham Sy Thanh, Director of Chinese Economic Studies Program, Vietnam Institute for Economic and Policy Research (VEPR), any disruption to global trade, caused by the tense encounter of large trading partners such as the US and China, can create opportunities and challenges for third countries.
According to Pham Sy Thanh, Director of Chinese Economic Studies Program, Vietnam Institute for Economic and Policy Research (VEPR), any disruption to global trade, caused by the tense encounter of large trading partners such as the US and China, can create opportunities and challenges for third countries.
“The entire global trade system is now organized in production chains located in many countries. Hence, the real risk of trade wars is the spreading effect they induce over numerous countries rather than just over a group of nations,” specified Thanh. Moreover, the clash of the two great powers will set a precedent for other countries to follow, amid the growing trend of protectionism and nationalism worldwide, said Thanh.
The trade diversion, on the other hand, is likely to change the trade balance of a third country if the “fighters” want to make a bypass to enter the enemy’s playground. A case to be mentioned is that, China’s steel is supposed to have been rerouted, going through Vietnam before entering the US market during 2016-2017. “If this happens, Vietnam may be listed in the same group with China and face more difficulties in improving its export quality and quantity”, Pham Sy Thanh of VEPR told Hanoitimes.
Some Vietnamese officials believe the tariff will hardly affect the country. “The economy will grow faster this year with inflation under control and a relatively stable dong,” Truong Van Phuoc, head of the National Financial Supervisory Commission, told Bloomberg. “Trump’s recent import tariff changes will have a minor impact on Vietnam, as we are diversifying our markets and products to boost exports,” the adviser to Prime Minister Nguyen Xuan Phuc said.
On the other hand, there remain potential gains for Vietnamese companies, according to experts. “If Chinese exports to the US in certain product categories face higher tariffs, there will be opportunities for Vietnamese producers to fill that gap and displace Chinese exports”, said Stephen Olson of Hinrich Foundation.
“It is important to note however that the tariffs have not yet gone into effect, and have not even been officially finalized. But if tariffs are ultimately applied on product categories where Vietnamese companies are competitive, such as consumer goods, footwear, or apparel, there could be greater opportunities for Vietnamese companies”, Stephen Olson, Hinrich Foundation, Hong Kong wrote in an email to Hanoitimes. The likelihood of the US rejoining the TPP also create chances for Vietnam firms in the case, the Hong Kong-based economist said.
According to the Vietnam Steel Association, Vietnam’s steel sector exported more than 5.5 million tons of steel worth USD3.64 billion in 2017, marking an increase of 28.5% in volume and 45.4% in value compared to 2016.
The total steel output in the first four months of 2018 is expected to hit 3.21 million tons, up 8.8% year-on-year. The association said Vietnam’s steel sector production in 2018 has the potential for 20-22% growth against 2017.
The trade diversion, on the other hand, is likely to change the trade balance of a third country if the “fighters” want to make a bypass to enter the enemy’s playground. A case to be mentioned is that, China’s steel is supposed to have been rerouted, going through Vietnam before entering the US market during 2016-2017. “If this happens, Vietnam may be listed in the same group with China and face more difficulties in improving its export quality and quantity”, Pham Sy Thanh of VEPR told Hanoitimes.
Some Vietnamese officials believe the tariff will hardly affect the country. “The economy will grow faster this year with inflation under control and a relatively stable dong,” Truong Van Phuoc, head of the National Financial Supervisory Commission, told Bloomberg. “Trump’s recent import tariff changes will have a minor impact on Vietnam, as we are diversifying our markets and products to boost exports,” the adviser to Prime Minister Nguyen Xuan Phuc said.
On the other hand, there remain potential gains for Vietnamese companies, according to experts. “If Chinese exports to the US in certain product categories face higher tariffs, there will be opportunities for Vietnamese producers to fill that gap and displace Chinese exports”, said Stephen Olson of Hinrich Foundation.
“It is important to note however that the tariffs have not yet gone into effect, and have not even been officially finalized. But if tariffs are ultimately applied on product categories where Vietnamese companies are competitive, such as consumer goods, footwear, or apparel, there could be greater opportunities for Vietnamese companies”, Stephen Olson, Hinrich Foundation, Hong Kong wrote in an email to Hanoitimes. The likelihood of the US rejoining the TPP also create chances for Vietnam firms in the case, the Hong Kong-based economist said.
According to the Vietnam Steel Association, Vietnam’s steel sector exported more than 5.5 million tons of steel worth USD3.64 billion in 2017, marking an increase of 28.5% in volume and 45.4% in value compared to 2016.
The total steel output in the first four months of 2018 is expected to hit 3.21 million tons, up 8.8% year-on-year. The association said Vietnam’s steel sector production in 2018 has the potential for 20-22% growth against 2017.
Source: http://www.hanoitimes.vn/economy/industry/2018/05/81E0C631/potential-risks-and-gains-for-vietnam-from-us-tariffs-on-steel-and-aluminum/