China could use Vietnam to avoid US tariffs: experts

Vietnamese products would face tough competition from China in both the domestic and overseas markets, Nguyen Thi Thu Trang, director of the Vietnam Chamber of Commerce and Industry’s (VCCI) WTO Center, said at a recent conference on the impact of the Sino-American trade spat.

In the domestic market, China might seek to dump its goods on Vietnam to avoid Donald Trump’s tariffs. Cheaper Chinese goods competing with Vietnamese goods will not benefit Vietnam’s economy.

In overseas market, China might borrow the "made in Vietnam" label to dodge U.S. tariffs.

If this cannot be controlled, there could be grave consequences for Vietnamese firms since the U.S. might apply the same tariffs as they have done on China, according to industry insiders. 

Ho Duc Lam, chairman of the Vietnam Plastics Association, said his industry has been impacted by having to compete directly with Chinese companies as China might borrow the "made in Vietnam" label to dodge U.S. tariffs.

Tran Dinh Thien, an economist and member of the Prime Minister's Economic Advisory Group, noted that the trade war brings both opportunities and challenges for Vietnam, but it is up to local companies to identify the opportunities.

He said the trade war has hit investors’ confidence causing them to pull out of emerging markets including Vietnam. The global supply chain is badly disrupted as a result, and the investment environment has become uncertain, he said.

Lam argued that to protect domestic companies the government should consider import taxes if there are signs of a safeguard action. 

It should not issue licenses if there is no guarantee that more than two thirds of the production chain would be in Vietnam, and should promote free trade agreements with Europe and others to reduce Vietnam’s dependence on the U.S. and China, he added.

Trang of the VCCI said since the trade war shows no signs of ending soon production enterprises should monitor the situation to respond nimbly to changes and should know where and how to take advantage of potential opportunities.

It is known which goods face sanctions, so businesses should research about customers for those goods and offer them a better deal, she said.

The U.S.-China trade war escalated in September with the U.S. levying an additional 10 percent tariff on about $200 billion worth of Chinese products. Washington is set to raise the tariffs to 25 percent in January if there is no agreement between the both sides, according to Reuters.

China retaliated with 5 and 10 percent tariffs on $60 billion worth of U.S. products.