High chances of China avoiding US tariffs by using Vietnam

27 Sep '18

2 min read

Vietnam may suffer collateral damage if Chinese businesses use made-in-Vietnam labels to avoid US tariffs, experts from the Vietnamese textile and footwear industry caution. According to economist Vu Dinh Anh, there is high probability of Chinese firms seeking to export their products through Vietnam to the United States amid the ongoing US-China trade war.

Chinese manufacturers may either export their products to Vietnam and ask a Vietnamese company to label those as ‘made in Vietnam’ or set up factories in Vietnam and manufacture products with raw materials imported from China, Vu Dinh told a Vietnamese daily.

This may lead the United States to impose the same kind of tariffs on Vietnam, he added.

This has already happened with steel. In May this year, the United States slapped anti-dumping duties of 199.76 per cent and countervailing duties of 256.44 per cent on imports of cold-rolled steel produced in Vietnam using Chinese-origin substrate.

Pham Xuan Hong, chairman of the Ho Chi Minh City Association of Garment, Textile, Embroidery and Knitting urged the Vietnamese government to control such a situation by tracing the origin of products and penalizing violations.

Diep Thanh Kiet, vice chairman of the Vietnam Leather, Footwear and Handbag Association (LEFASO), also foresees a high possibility of Chinese bags being exported to the United States through Vietnam. But there are opportunities for Vietnamese consumer goods exports amid the trade war.

But Can Van Luc, chief economist with the Bank of Investment and Development of Vietnam (BIDV), sees opportunities created by the trade war as about 27 per cent of Chinese goods set to be affected by the new tariffs are consumer goods, many of which Vietnam exports to the United States.

A recent report by Bao Viet Securities (BVSC) said footwear and textile products have a ‘great opportunity’ to grab US market share from China.

According to Viet Capital Securities (VCSC), Vietnam will benefit from the trade war if US businesses look for an alternative supply chain and Americans start buying Vietnamese goods. (DS)

Fibre2Fashion News Desk – India

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