US election: Vietnam to benefit either way

As the world waits to see if Republican Donald Trump remains President for another four years or hands over the reins to Democrat Joe Biden, a former Vice President, Vietnamese experts are divided on how the Vietnamese economy will benefit.

Economist Le Dang Doanh told VnExpress International that a victory for Trump will favor Vietnam as the taxes that he has imposed on China in the last couple of years has allowed Vietnam to increase exports to the U.S. and triggered a wave of multinationals shifting their factories to Vietnam as they diversify their supply chains.

If Trump is able to keep his chair in the White House, these firm policies toward China will likely continue to be imposed and Vietnam can see more benefits in its trade relations with the U.S., he added.

The production shift from China, which was deemed a possibility years ago, has become a reality now. Apple has begun assembling its wireless earbuds AirPods Pro in Vietnam and the world’s largest contract manufacturer Foxconn has confirmed that Vietnam is its largest manufacturing hub in Southeast Asia.

The country’s share of global textile exports rose from 5.9 percent in 2015 to 8.9 percent last year, while that of China fell from 38.3 to 29.1 percent, indicating that the shifting of companies out of China to reduce production costs has happened, according to a report by market research firm Fitch Solutions.

Echoing Doanh, economist Can Van Luc said for now it seems that a victory for Trump will give Vietnam economic advantages as his administration has been focusing on promoting diplomatic relationships with India and the Asia-Pacific region.

The fact that U.S. Secretary of State Mike Pompeo wrapped up a five-nation visit to Asia in Vietnam last week shows that the administration is strongly committed to strengthening bilateral ties, including trade ties, he added.

Although Vietnam’s export growth this year has been slower because of the Covid-19 pandemic, the U.S. remained its largest exports market in the first 10 months, with the export value rising 24 percent year-on-year to $62.3 billion.

Experts have also noted that the six major business deals signed during the Indo-Pacific Business Forum held in Hanoi last month, which included U.S. companies’ commitment to develop billion-dollar liquefied natural gas plants in Vietnam and Vietnamese businesses’ commitment to purchase of $500 million worth of American pork in the next five years, show that the trajectory of bilateral trade ties remains upward.

These factors could account for Trump’s popularity in Vietnam. In an online VnExpress poll this month, 79 percent of 59,600 respondents wanted Trump to win the election.

Biden’s okay, too

But other experts say that there will also be benefits for Vietnam if Biden wins. Economist Nguyen Tri Hieu said that under Biden, the U.S. might consider rejoining the Trans-Pacific Partnership that the Trump administration withdrew from in 2017, claiming the pact would hurt U.S. workers.

Biden said last year that the U.S. should renegotiate pieces of this trade pact to tighten up on labor and environment issues; and re-assemble a coalition to counter-balance China’s expansion policies.

Hieu said that should the U.S. rejoin the partnership, Vietnam will benefit from lower tariffs in major export categories and will see exports to the country grow even faster.

He was also concerned that another four years of Trump pose challenges for Vietnam as his administration has expressed concerns about Vietnam’s currency policies and high trade surplus.

The U.S. last month began investigating if Vietnam has been undervaluing its currency and harming U.S. commerce, after putting the country on its watch list of currency manipulators last year.

Vietnam’s trade surplus with the U.S. was $44.3 billlion in the first nine months, up nearly 19 percent year-on-year, according to Vietnam Customs.

Vietnamese officials have repeatedly affirmed that the country does not seek unfair trade advantages via its monetary policies. Central bank governor Le Minh Hung said last month that the country "has not intended and will not intend to use monetary policies in general and exchange rates in particular to create unfair competitive advantages in international trade."

Hieu said if Trump’s tough currency policies are imposed in the coming years, it could result in Vietnamese exporters being hurt by higher tariffs of up to 25 percent.

Furthermore, prolonged trade tensions between the U.S. and China could eventually force Vietnam to take sides, which is against the country’s trade policy, he added.

Therefore if Biden wins, his "seemingly more peaceful policy with China" might reduce tensions between the world’s two largest economies and this could take away the threat of Vietnamese goods being hit with high tariffs under Trump’s currency policies, Hieu said.