As the world prepares for what Donald Trump dubs the “Liberation Day in America!!!” next week, nations brace themselves for the potential impact of his new tariffs. After imposing significant import taxes on foreign car manufacturers, Vietnam stands at risk of becoming the target of Trump’s latest trade measures. With a large trade deficit with the US, Vietnam has been one of the countries that benefitted from corporations relocating their manufacturing out of China during Trump’s previous term. Vietnam’s Prime Minister, Pham Minh Chinh, has expressed a desire for a diplomatic approach to navigate these turbulent waters, humorously claiming he would be willing to spend a day “golfing all day long” with Trump to foster goodwill and potentially protect Vietnam from looming tariffs.
Despite this light-hearted proposal, the reality is grim. Trump has not targeted Vietnam specifically yet, even though it ranks third in terms of trade deficit with the US, behind China and Mexico. Analysts note that while Vietnam is savvy in its engagement with the US, it might not be enough to dodge the full brunt of Trump’s planned tariff initiatives. Stephen Olson, a former US trade negotiator, echoed sentiments that while personal relationships are consequential in Trump’s dealings, his preference for a tough trade image could mitigate any goodwill built through leisure activities like golf.
Interestingly, Vietnam is proactively trying to avoid escalating trade issues with the US. The country has recently allowed SpaceX, owned by Trump ally Elon Musk, to trial its Starlink satellite services in Vietnam, signifying a cooperative stance. Moreover, Vietnam has announced plans to lower tariffs on several imports from the US, including energy and automotive goods, alongside recent deals worth over $4 billion in areas like oil and gas exploration.
This comprehensive approach aligns with Vietnam’s foreign policy, known as “bamboo diplomacy”, marked by flexibility amidst external pressures. Should the US elevate its trade pressures, analysts predict that Vietnam might offer to ease access to its abundant resources, such as rare earth minerals, or facilitate significant investments in tourism and gaming sectors for American interests.
Nevertheless, Vietnam’s predicament is complicated by its relationship with China, the largest supplier of goods to Vietnam, which could cause scrutiny from Trump’s administration due to potential economic overlaps. Economic analysts project a possible backlash from Trump against Vietnam, despite its current strategic positioning as a beneficiary of US-China tensions since many companies shifted manufacturing to Vietnamese facilities.
In light of these developments, the American Chamber of Commerce in Vietnam has conducted surveys revealing that many US manufacturers may find themselves laying off employees if tariffs are enacted. President Trump’s approach to boost the US economy through tariffs is viewed as a double-edged sword, enticing domestic manufacturing while simultaneously risking price surges for consumers and global trade disruptions.
As events continue to unfold, Vietnam’s maneuvering between maintaining favorable relations with the US while managing its dependencies on China will be critical in determining if it can successfully navigate Trump’s tariff strategy.