Ho Chi Minh Metropolis, Vietnam – Kieu Quoc Thanh, the CEO of cashew export enterprise SVC Group, says that everybody in his trade has been “feeling loopy” for the previous two weeks.
Since United States President Donald Trump introduced his since-paused “reciprocal” tariffs on April 2, Thanh has witnessed mass confusion amongst Vietnamese exporters.
Many companies reliant on the US market are checking on-line hourly for updates on the tariffs, Thanh says, whereas he has a transport container stuffed with cashews sure for the US market presently sitting in limbo.
Since Trump introduced a 90-day pause on Vietnam’s 46 p.c tariff and duties on dozens of different international locations, the US has imposed a baseline 10 p.c levy on imports from all international locations, together with Vietnam.
However Thanh’s prospects within the US and customs officers alike are unsure how a lot to tax his merchandise, he says.
“Nobody is aware of what’s occurring,” Thanh instructed Al Jazeera at his Ho Chi Minh Metropolis workplace final week.
Whereas companies reminiscent of Thanh’s navigate the disruption, Hanoi and Washington are in discussions a couple of commerce deal after agreeing to start negotiations on April 10.
For Vietnam, one of many world’s most export-reliant economies, the stakes might scarcely be increased.
The US is the Southeast Asian nation’s largest export market, with shipments to it alone final yr accounting for 30 p.c of gross home product (GDP).
Whereas Trump’s tariff pause led to some hope in Vietnam, the nation is on tenterhooks about what may occur subsequent, stated Tyler Manh Dung Nguyen, chief market strategist at fairness agency Ho Chi Minh Metropolis Securities Company.
“We’re having a interval of utmost uncertainty, not just for the monetary market, but additionally for companies,” Nguyen instructed Al Jazeera.
“It’s like a actuality present,” Nguyen added. “All the things adjustments day-after-day.”
Trump’s commerce salvoes have drawn sharp distinction with the decades-long strategy of warming relations between Washington and Hanoi, culminating within the former enemies upgrading their ties to a “Complete Strategic Partnership” in 2023.
For Eddie Thai, a Vietnamese American who co-founded the Ho Chi Minh Metropolis-based enterprise capital agency Ascend Vietnam Ventures, it has been disheartening to see relations come underneath pressure, significantly forward of the upcoming fiftieth anniversary of the top of the Vietnam Struggle on April 30.
“I don’t assume it has thrown us again 50 years, I wouldn’t say that far, however it’s burning a number of goodwill that lots of people on either side of the ocean have been attempting to construct because the 90s,” Thai instructed Al Jazeera, calling Trump’s coping with Vietnam damaging and personally “disappointing as an American”.
With the US and Vietnam trying in direction of a commerce deal, China, Hanoi’s largest supply of imports and its second-largest export vacation spot, has loomed massive over the negotiations.
On Monday, Chinese language President Xi Jinping visited Hanoi as a part of a five-day tour of Southeast Asia, a visit broadly seen as an effort to forged China as a extra dependable buying and selling companion for the area than the US.
Upon his arrival, Xi was greeted on the airport by Vietnamese President Luong Cuong, and later obtained a 21-gun salute at Hanoi’s Presidential Palace.
Reacting to the nice and cozy reception for the Chinese language chief, Trump advised the international locations would use their talks to scheme towards the US.
“That’s a stunning assembly. Assembly like, attempting to determine, ‘How will we screw the US of America?’” Trump instructed reporters on the White Home.
In response to Chinese language state information outlet Xinhua, Xi urged Vietnam to withstand “unilateral bullying” and said that “China’s mega market is at all times open to Vietnam”.
Throughout Xi’s go to, the international locations signed 45 agreements, Chinese language and Vietnamese media reported, with out offering particulars of the offers.
With the US and China slapping one another’s items with tariffs exceeding 100%, Vietnam has change into the “diplomatic man within the center,” stated Nguyen, the strategist at Ho Chi Minh Metropolis Securities Company.
“[Hanoi] at all times tries to be impartial in each scenario,” Nguyen stated. “We don’t aspect with one nation to struggle one other nation.”
US commerce deficit
Trump’s tariffs have additionally raised the ire of overseas companies based mostly in Vietnam.
It will be an unattainable process for Vietnam to erase its commerce deficit with the US – the third-highest in 2024 at $123.5bn – given the variations between the 2 economies, stated Bruno Jaspaert, common director of DEEP C Industrial Zones within the northern port city of Haiphong.
“Any nation like Vietnam, in actuality, has no leverage towards the States,” Jaspaert, who can be head of EuroCham Vietnam, instructed Al Jazeera.
“That silly components of theirs can by no means ever be balanced as a result of it would take many years earlier than Vietnam should buy sufficient,” Jaspaert stated, referring to the controversial calculations utilized by the Trump administration to give you its “reciprocal” tariff charges.
Going through the specter of an enormous financial blow, Hanoi has put appreciable effort into entering into the nice graces of the Trump administration.
The federal government has pledged to purchase extra Boeing planes and liquefied pure fuel, and opened talks on buying C-130 cargo planes from Lockheed Martin.
Final month, officers agreed to permit Elon Musk’s Starlink satellite tv for pc web service to function within the nation on a trial foundation.
Vietnam has additionally signed offers with the Trump Group.
Shortly earlier than Trump’s re-election, his holding firm agreed to speculate $1.5bn in a golf course and lodge venture in Communist Celebration chief To Lam’s house province of Hung Yen.
“I imagine that the management in Hanoi – they’ve accomplished quite a bit to safe a extra lenient method,” Nguyen Khac Giang, visiting fellow at Singapore’s ISEAS-Yusof Ishak Institute, instructed Al Jazeera.
To Lam was one of many first overseas leaders to get on the cellphone with Trump after his April 2 tariff announcement and despatched a delegation to Washington to barter together with his administration on April 10.
Amongst his efforts to mollify Trump, To Lam has stated he’s prepared to cut back tariffs on US items to zero.
“There isn’t any various alternative for Vietnam apart from making peace with the US to safe entry to the US market,” Giang stated. “The Vietnamese should do what they will to protect that entry.”
Regardless of the dangers for Vietnam, some observers additionally see alternatives for the nation in Trump’s commerce struggle.
Within the quick time period, companies are ramping up manufacturing so as to get items to the US within the subsequent three months whereas the ten p.c tariff continues to be in place.
“Fairly just a few individuals are planning to ship out quite a bit – 10 p.c continues to be doable,” Jaspaert stated. “If Trump desires to face as much as his promise, the tariffs will go up once more … I don’t imagine we’re out of the woods but.”
In the long term, Vietnam might once more be a beneficiary of elevated volatility between Washington and Beijing underneath Trump.
Throughout Trump’s first time period, the Southeast Asian nation benefitted from an exodus of factories from China as companies sought to minimize their publicity to geopolitical dangers and commerce obstacles.
“The actual battle right here is unashamedly the US towards China,” Craig Martin, chairman of Ho Chi Minh Metropolis-based non-public fairness agency Dynam Capital, instructed Al Jazeera.
“You’ve bought this uncertainty, this very heated commerce struggle with eye-watering ranges of tariffs [between Washington and Beijing].” “You might truly see a silver lining, being folks trying to do extra in Vietnam,” Martin added.
Vietnam has additionally been underneath US scrutiny for transport items from China into the US with minimal manufacturing undertaken in Vietnam.
Such scrutiny will possible push Vietnam to spend money on extra value-added manufacturing, stated Nguyen, the market strategist.
“I feel there can be a mechanism that needs to be agreed by each governments to manage that – to guarantee that there’s no transhipment,” he stated. “I feel that may truly be a great factor for Vietnam within the mid to long term.”
Final week, the Reuters information company reported that Hanoi was providing to crack down on Chinese language items being shipped to the US through its territory and to tighten controls on delicate exports to China.
The report, which cited an individual conversant in the matter and a authorities doc, got here after White Home commerce adviser Peter Navarro raised considerations that Chinese language items have been being despatched to the US with “Made in Vietnam” labels to avail of decrease import taxes.
The US-China tensions could possibly be a “golden alternative” for Europe to extend its commerce with Vietnam and for Hanoi to diversify its commerce extra broadly, Jaspaert stated.
“Vietnam has gained all of the wars it’s been in, so I imagine it would additionally win the tariff struggle,” Jaspaert stated.
