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US President Donald Trump has announced a trade pact with Vietnam on Wednesday, but his miserable details left economists who think about what it would mean to the flow of Chinese goods that have been overcome in the country.
Trump said Wednesday It would be 20% of the Vietnam goods tariff and 40% of “translipting” tariffs for goods occurring in another country and transferred to Vietnam for final shipment to the US
Chinese manufacturers have used a transiding to go for hefty Direct deliveries to the US, using Vietnam as the main relocation center.
The White House Trade Advisor, Peter Navaro, claimed that about a third of Vietnam exports were redirected from China and describes Vietnam as “in essence by Communist China’s colony” in an interview with Fox News in April.
The latest deal is a clear blow to such redirect deliveries from China, said Yao Jin, Associate Professor of the Department of Supply Chain at Miami University.
But the use of targeted transportation levies will be a difficult task for Hanoi, as it will have to determine what can be qualified as “done in Vietnam” and what is a transition.
“If this only extends to pure transitions – goods sent from China to the US through Vietnamese ports, without any local meetings – then it is unlikely to be influenced by Vietnam,” said Frederick Neuman, the chief economist of Asia at HSBC Bank.
However, if the tariff is 40% extending to “all Vietnamese goods with even the minimum share of Chinese components, the disruptions can be significant,” Neuman said.
Similarly, Dan van, the Chinese director at the Eurosia Group, said that “it is unclear how it will work – presumably the burden comes to Hanoi for issuing the Rules of Certificates of Origin – and what level of Chinese components, if the metric will be considered too much.”
As more Chinese manufacturers have moved production in Vietnam from the first term Trump, the Vietnam trading surplus with the US is more than three times on A to A to A to A to A Record high 123.5 billion Last year with less than $ 40 billion in 2018, According to the US Census Bureau.
Template for others?
The agreement has made Vietnam the last country, after the UK and China provide some Trump’s trade assistance and probably serve as an important reference to other southeastern Asian countries in their permanent trade talks, analysts said.
Many countries are racing to reach trading transactions from the US before the 90-day pause end on July 9, when Trump’s “return” tariffs are ready to take effect.
Many Southeast Asian countries profit From the last trade war in the US-China during the first term Trump, playing the role of alternative production and exports.
More trading transactions will be determined by the country’s own opinion on its impact on the US and China markets, the level of relocation in this country and the consequences for the local industry, said Lin Song, Chinese economist in Ing.
Sending from China to many southeastern Asian countries this year has grown to record high, Chinese customs showed data. Because exporters have distracted the shipment to alternative markets for sale to local markets or moving to the US
If trading deals in Vietnam and UK will be some indications, future US transactions with other countries are likely to provide measures to transition, increase the obligations for the purchase of US goods and “provisions aimed at China,” said Stephen Olson, former USA-YUSEA SEPTS ALUCTIONS. Ishak, said CNBC.
Strict security requirements for steel and pharmaceuticals in the US-UK are widely regarded as an attempt to squeeze China from the British supply chain.
China holds the fire
On Thursday, China pushed away from the US and Vietnam transaction over the concern that Trump administration would use its permanent tariff talks with third countries to stop exports.
The country’s ministry said on Thursday that it was “Conducting Assessment” Agreements calling on other countries not to seek deal with Washington at the expense of China’s interests.
China is likely to see Washington as “mutual tariff talks to force third countries to try to squeeze China out of the supply network,” Olson added. He expects Beijing to press on the countries so as not to be subjected to the requirements of us and push off this practice in negotiations with Washington.
Given this, Beijing is likely to refuse any specific actions until the details of the transaction are clarified, experts said, waiting for the trade deals of other countries.
“Running the only trade transaction in Vietnam would be unreasonable,” the Ing song said.
In recent days, the United States and China have gone back to restrictive measures against each other in honor of the trade consensus reached in Switzerland in Geneva, Switzerland. Since then, Washington has raised restrictions on Ethan, software for the development of chips and parts of jet engines, while Beijing is installed in rare land export.
Both sides reached the trade base Last month after the London talks, which remain in force until mid -August, and Chinese goods are currently facing tariffs about 55%.
The US-Vietnam transaction also implies that the final tariffs for Chinese goods are unlikely to fall under this threshold 40%, according to Nick Marra, the chief economist of the economists’ intelligence department, since lower duties on direct dispatch can encourage firms to move there, undermining the more broad goal of the Trump administration.
