The US and Vietnam have reached a trade deal, avoiding the most severe tariffs on Vietnamese exports to the US. However, the agreement includes a catch that could anger China, the largest trading partner for most Asian countries.
Under the deal, Vietnamese goods will be tariffed at 20%, lower than the initial 46% “reciprocal” tariff announced in April. However, goods deemed transshipped will face a 40% rate, aimed at countering China’s unfair trade practices.
Transshipping involves transferring cargo from one vessel to another while in transit to disguise a product’s country-of-origin and evade import levies. The higher tier of tariffs on transshipments indirectly targets Chinese exports, which have been routed through Vietnam to bypass US import levies.
Vietnam has agreed to remove all tariffs on US imports, with President Donald Trump calling it “OPENING THEIR MARKET TO THE UNITED STATES.” The deal is seen as an effort to counter China’s unfair trade practices and promote closer ties between the US and Vietnam.
However, some experts warn that restrictions on transshipments could impact Vietnam’s economy, particularly if Chinese companies exploit loopholes. China has vowed to retaliate if its interests are hurt by the US-Vietnam trade deal.
The agreement also raises questions about how China will respond and whether the US is trying to shut China out of global supply chains entirely. Some experts suggest that the US wants to discourage countries from relying on Chinese products, while others argue that this approach could have unintended consequences for global trade.
As tensions between the US and China continue to rise, the US-Vietnam trade deal highlights the complex web of economic relationships between the two superpowers and their Asian allies.
Source: https://time.com/7300087/trump-us-vietnam-trade-deal-china-transshipments