Vietnamese steel, wood firms might gain from US-China trade war

The recent escalation of trade tensions between the U.S. and China could have a positive effect for some industries in Vietnam, but experts warn these gains could prove short-lived.

U.S. President Donald Trump announced last week that he would push ahead with tariffs on $50 billion of Chinese imports starting July 6, and China retaliated by slapping the same amount of duties on commodities from the U.S.

The U.S. would impose a 25 percent tariff on more than 800 strategically important imports from China including cars and oil, while China announced that it would slap a 25 percent tariff on 659 U.S. products, from soybeans to seafood, a Reuters report said, citing the Xinhua news agency.

Vietnamese wood businesses will be benefit from this trade war should the U.S. impose a heavy tax on Chinese wood starting this July, a representative of the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA) told the Tuoi Tre newspaper.

In the first two months this year, exports to the U.S. accounted for 39.7 percent of total wood export turnover, an increase of 14.6 percent from the same time last year, the source said.

One of the reasons for this increase is the anti-dumping duties U.S. slapped on China at the end of last year, the source said.

Vietnam is currently the fifth largest exporter of wood to the U.S., while China tops the list, according to HAWA statistics. If Vietnamese businesses can take this opportunity, growth can be much faster than now, the source said.

Apart from wood, Vietnamese steel businesses would also enjoy a surge in steel exports to the U.S. if the latter ups its anti-dumping tariffs on China by 25-35 percent, Nguyen Huy Do, marketing director of Vietnam Italy Steel Jsc, told Tuoi Tre.

However, industry insiders are warning that China might invest in manufacturing steel in Vietnam to have a ‘Vietnam label’ on products that will eventually be exported to the U.S.

Last month, the U.S. Commerce Department slapped steep import duties on steel products from Vietnam that originated in China, finding that they evaded U.S. anti-dumping and anti-subsidy orders.

After this, the Vietnam Steel Association has requested authorities to impose tighter controls on foreign investment in steel.

Another risk is that China dumps its residual inventories on other countries in the region, including Vietnam, which will result in an unstable trade market, Dinh Tuan Minh, research director of market research firm Viet Analytics, told local media recently.

Vietnam therefore needs to be careful amidst this trade war between the world’s largest economies and should not let itself be the target of steep tariffs, Minh said.

“What the U.S. is doing to China can be done to Vietnam at some point,” he said.