The trade war between the U.S. and China officially started on 6 July after the U.S. started imposing a 25 per cent duty on US$34 billion worth of Chinese machineries, electronics, and high-tech equipment imports. The Chinese government reacted immediately with matching tariffs on the same amount of U.S. exports to China.
The Trump administration also announced that they will slap a 10 per cent tariffs on additional US$200 billion worth of Chinese goods which could take effect after public consultations end on August 30, according to a statement from the US Trade Representative’s office on July 10. The list of thousands of Chinese imports to be hit with the tariffs includes hundreds of food products, raw materials and consumer goods such as wood products and furniture.
Latest update on the trade war
The latest update on August 16, though, saw the U.S and Chinese governments announcing lower-level trade talks on the 22nd and 23rd of August to work on resolving the trade war. A nine-member delegation from Beijing, led by Vice Commerce Minister Wang Shouwen, will hold meetings with U.S. officials led by the Treasury undersecretary, David Malpass.
The list is massive and includes industrial goods and chemicals, consumer products, and wood products. If the list comes into effect, just under 50 per cent of all Chinese imports would be imposed with tariffs.
Wood products that will face duties include oak, beech, maple, ash, cherry, mouldings, rods, particleboard, various types of plywood, doors, charcoal, corks and stoppers, as well as wicker and bamboo baskets.
Furniture items include bedding, mattresses, car seats, wooden chairs, furniture designed for offices, kitchens, chandeliers and lamps. Wood pulp products and paper products are also on the list.
The proposed tariffs would be on top of the 25 per cent tariffs that the Trump administration has already implemented on US$50 billion of Chinese goods: $34 billion of which already took effect on July 6.
As Vietnam News reported, the Association of Vietnam Timber and Forest Product (Vietfores) and timber exporters said that close monitoring is necessary in order to respond and take measures actively.
Nguyễn Tôn Quyền, vice chairman of Vietfores, said that the export value of Vietnamese wood products to the U.S. market is relatively high- accounting for 30 per cent of the total forest export in the first six months of 2018, or US$4.4 billion. Quyền said right now, export numbers to the U.S. market remain stable and exporters had signed orders for this year.
Huỳnh Quang Thanh, chairman of Bình Dương Furniture Association cum chairman of Hiệp Long Furniture Company, said that trade tensions between the U.S. and China would not have an immediate impact on the export activities of Vietnam in general and particularly, the furniture industry of Bình Dương.
Economist: Vietnam can gain from the U.S.-China trade war
As reported by The Voice of Vietnam, Professor Pham Tat Thang, senior researcher at the Trade Research Institute at the Ministry of Industry and Trade, held the opinion that no one will win in the U.S.-China trade war, neither the two nations involved nor the world’s economy, but Vietnam can still benefit if it is ready to take full advantage of the situation.
The tariff war is a threat to the global economy as it goes against the global trend towards trade liberalisation while triggering escalating protectionism. It can result in a global economic slowdown, Thang explained.
Chinese products and projects will not be allowed to enter into the U.S. like before so Chinese government and enterprises are likely to find alternatives for them in neighbouring markets like Vietnam, he noted.
As Chinese exports decline, reducing its liquidity, demand for imports in China will also fall. Coupled with China’s escalation of trade barriers, it may hurt Vietnam’s exports to neighbouring countries, which have experienced a surge in recent years, explained the researcher.
However, Chinese products hit by high tariffs will lose their competitive edge in the U.S. and doors will open for similar goods from Vietnam. If Vietnam can take advantage of the situation, it can turn challenges into opportunities.
But Thang warned that Chinese exporters may find ways to disguise their origin of goods to avoid the U.S. tariffs, perhaps by faking that their products are originated in Vietnam, he said.
The economist urged Vietnamese enterprises to be aware of technical trade barriers in each foreign market, keep updated in related regulations and be ready to satisfy new requirements, as well as cooperate to help protect each other in order to survive the wave of protectionism in the global trade.
In 2017, China was the largest trade partner of Vietnam. The bilateral trade between the two sides was estimated at US$93.8 billion, of which exports to China totalled US$35.3 billion, up 60.6 per cent year-on-year, and imports from China reached US$58.5 billion, up 16.9 per cent year-on-year. Vietnam’s trade deficit with China was US$23.3 billion, down 17.4 per cent.
The U.S. was third in bilateral trade with Vietnam with US$50.7 billion, of which export values reached the highest level of US$41.5 billion, a year-on-year growth of 8 per cent, and import values stood at US$9.1 billion, up 4.9 per cent.