New US import tariffs will have 'minor' impact on Vietnam’s economic growth: official

By Minh Nga   March 14, 2018 | 07:00 pm GMT+7
New US import tariffs will have 'minor' impact on Vietnam’s economic growth: official
Motorcycles are seen on a street in Hanoi, Vietnam June 30, 2016. Photo by Reuters/Kham
Vietnam is diversifying its markets and products to avoid overreliance on any one country.

Vietnam’s economy will grow at a faster pace in 2018 than it did last year when it hit a 10-year high, with U.S. President Trump’s new tariffs expected only to have a “minor” impact on growth, said a senior government official.

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 in an interview in Hanoi.

Last week, Trump slapped import tariffs of 25 percent on steel and 10 percent on aluminum.

Describing the alleged dumping of steel and aluminum on the U.S. market as “an assault on our country”, Trump said in an announcement that the best outcome would be for companies to move their mills and smelters to the U.S. He insisted that domestic metal production was vital to national security, Reuters reported on March 8.

Vietnam hopes to discuss “some sort of trade agreement” with the U.S., currently its biggest export market, to ease any barriers, Phuoc was quoted by Bloomberg as saying.

Vietnam exported 124,600 tons of steel worth over $104.2 million to the U.S. in the first two months of 2018, up two times in both volume and value against the same period last year.

Vietnam is the 12th largest steel exporter to the U.S., and third after Canada and Mexico in aluminum exports, according to data from the Vietnam Steel Association.

The nation is now turning to free trade agreements with other countries to save its economy from any impacts caused by new U.S. tariffs.

It signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) with 10 other countries on March 9, which the World Bank said will yield robust economic gains for Vietnam.

According to analysts, multilateral trade agreements such as the CPTPP are expected to boost Vietnam’s investment and export driven growth model.

The CPTPP will increase Vietnam’s gross domestic product (GDP) by 1.1 percent by 2030, according to the report. “Assuming a modest boost to productivity, the estimated increase of GDP would amount to 3.5 percent from the CPTPP,” said Ousmane Dione, World Bank country director for Vietnam.

Lower tariffs under the trade deal are expected to help boost Vietnam’s exports by 4 percent, said Tran Toan Thang from the National Center for Socio-Economic Information and Forecasting.

Vietnam’s economy is likely to grow by 7.41 percent in the first quarter of this year, led by robust exports and tourism, said PM Nguyen Xuan Phuc in a statement posted on the government website on Monday.

The country's economic growth is forecast to expand by 6.83 percent this year from 6.81 percent last year, the highest in a decade, the investment ministry said on Wednesday, citing the forecasting center.

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