Author: Yang Chao

The "reciprocal tariffs" that Trump has been calling for for a long time are coming. On the afternoon of February 13, Trump signed a memorandum requiring the U.S. Department of Commerce, the Office of Trade Representatives and relevant departments to determine the reciprocal tariffs between the United States and each foreign trading partner. Howard Lutnick, Trump-nominated Commerce Secretary, said the new tax rate could be ready as soon as April 2. Trump's "reciprocal tariffs" refer not only to the tax rate, but also to achieve what he calls "trade balance." According to the memorandum signed by Trump, the United States will focus on reviewing five categories of so-called "unequal trade relations" including tariffs imposed by trading partners on American goods, unfair and discriminatory taxes imposed by other countries on American companies, including value-added taxes, and non-tariff barriers or other unfair measures encountered by American companies in other countries. The memorandum signed by Trump is obviously criticizing the fact that there is a major trade imbalance with the United States. Trump does not immediately launch a tariff war, but uses tariffs as a bargaining chip to use the asymmetric economic dependence between the United States and other countries to force countries to negotiate with the United States, thereby maximizing American interests. White House officials said Trump hopes to discuss with others how the existing trade environment can create an unbalanced trade environment. If countries are willing to lower tariffs or lift other trade barriers, Trump is also very happy to lower tariffs. Vietnam, which has developed rapidly in recent years, has now become the fourth largest trade surplus in the world with the United States, second only to the European Union and Mexico. In 2017 when Trump came to power, Vietnam's trade surplus with the United States was US$38 billion, and in 2024, Vietnam's trade surplus with the United States had exceeded US$120 billion. If the United States raises import tariffs, it will greatly affect Vietnam's exports, because Vietnam's exports to the United States account for 30% of the total export value. Vietnam exports the most to the United States to the United States, including: computers, electronic products and parts; machinery and equipment; textiles, clothing and footwear; agricultural products, etc. If the United States imposes a full tax on imported goods, it will increase the cost of exporting Vietnam's goods to the United States, causing Vietnam's major export industries such as electronics, clothing and footwear to lose their competitive advantage. Therefore, Vietnam is also nervous about the possible U.S. tariffs. Vietnamese Prime Minister Fan Ming-Chun is already preparing for a possible trade war. Fan Mingzheng believes that the US tariff war will affect Vietnam's exports and production companies, and Vietnam's economy is at risk. In addition, if the United States re-accuses Vietnam of manipulating exchange rates, Vietnam may face stricter financial regulatory measures, which will affect foreign capital inflows. Vietnam is worried that Trump, who pursues a trade balance, will put tariffs and other trade restrictions on Vietnam to achieve its so-called "reciprocal tariffs." Vietnam's Foreign Ministry said on February 13 that Vietnam is willing to negotiate on the new tariffs imposed by the United States on steel. If Vietnam wants to avoid Trump's tariffs, it will lose sincerity to the United States, such as buying more American products, such as American military equipment, civiliansUse aircraft, natural gas and agricultural products to narrow the trade surplus with the United States. In addition, Vietnam will open more markets to US companies, such as further opening up service areas, such as finance, banking, insurance or education. Vietnam's Minister of Industry and Trade Nguyen Hongyan said that Vietnam has no intention of taking measures that create burdens or restrict trade with the United States. It is ready to open the market, welcomes U.S. investors to participate in projects in new energy, oil and gas, and mining, and also imports more agricultural products from the United States. If Vietnam increases imports to the United States in order to reduce its trade surplus with the United States, it may squeeze out the original share of other countries' goods in the Vietnamese market. In addition, in order to plug the transfer loopholes, the United States may expand the scope of investigation to prevent other countries from being "transferred" to Vietnam and then exported to the United States. The United States has repeatedly investigated that other countries' companies use Vietnam as a transit place to evade tariffs. If the United States further strengthens supervision, it will be more difficult to transfer Vietnam and export it to the US market. The United States may also raise the certification standards for "Made in Vietnam" in the origin, such as how many raw materials and components need to be included to be produced in Vietnam, and increase the percentage requirements for local assembly or production in Vietnam. Under the requirements of the United States, Vietnam may increase law enforcement efforts, restrict and crack down on fraud and transshipment of origin, etc., and investment review, verification and certification of goods' certificates of origin may also be tighter. The Ministry of Industry and Trade of Vietnam is promoting the proposal on “strengthening management to combat evasion of trade defense and fraud in origin”, and at the same time investigate and punish violations. Under Trump's tariff threat, Vietnam has proposed to reduce its dependence on the United States, expand product exports to other markets such as ASEAN, the EU, India, South America, the Middle East and Africa, and adopt a diversified strategy. In Vietnamese companies' simple "re-export tax avoidance" strategy may be difficult to sustain, and switching to other Southeast Asia may not necessarily avoid Trump's tariff siege. Companies can only make difficult choices between transferring and expanding localized production in Vietnam. Although Trump's tariff war against Vietnam is about to break out, the United States should not impose tariffs on Vietnam immediately, but will gradually impose key taxes on some goods, mainly focusing on key products such as steel, aluminum, photovoltaics, etc. The electronics and semiconductor industries also have the risk of tariffs being imposed. In 2023, the United States imposes anti-dumping duties on Vietnamese steel, with a tax rate of up to 256%. Trump signed an executive order on February 10, announcing that starting from March 12, 25% tariffs will be imposed on all steel and aluminum imported by the United States, and canceled the tax-free steel and aluminum quotas and exemptions on some trading partners such as Canada, Mexico and Brazil. Considering the U.S. inflation factors and the need to win over Vietnam, Trump may eventually impose less or no import tariffs on the category of essential goods. Even if Trump decides to impose tariffs on Vietnam, it will be difficult for the United States to impose penalties on Vietnam based on surplus data alone. Therefore, it will take the "legal" approach and conduct "investigation" activities before the next step of tax increases can be carried out. Trump will fight and talk while fighting and thinking that the United States is seeking the greatest benefits in other aspects, such as security, economy, etc. The United States may also use Vietnam's "market economy status" as its bargaining chip to force the country toOpen south to the United States and make more concessions. In the U.S.-Vietnam relations, the United States attaches great importance to winning over Vietnam. After Obama launched a "charm offensive" against Vietnam, in November 2017, Vietnam became the first Southeast Asia to visit after Trump took office as president. In February 2019, then-U.S. President Trump expressed his gratitude to Vietnam for supporting the North Korean and US summit. During Trump's second term, the United States will eventually reach a balance point in terms of prioritizing its own economy and winning over Vietnam to serve the United States' "Indo-Pacific Strategy".