US-Vietnam Reach Trade Agreement Experts: Could Trigger New US-China Confrontation

AFP, Hanoi, 3rd. Vietnam and the United States reached a trade agreement yesterday, avoiding President Trump's high reciprocal tariffs. Experts have warned that this could trigger a new confrontation between Washington and Beijing.

The US-Vietnam trade agreement is the first complete agreement Trump has reached with an Asian country. Analysts believe this may help the outside world glimpse at the template Washington will use for other countries still trying to reach agreements.

Vietnam avoided the expected 46% high reciprocal tariff scheduled to take effect next week. According to the agreement, Vietnamese goods exported to the US will be subject to a minimum 20% tariff, while transshipped goods will be subject to a 40% tariff. The Vietnamese market will fully open to US products, including American cars.

The 40% tariff in the agreement will apply to goods deemed "transshipped," meaning products that originate from China and other countries, are transshipped through Vietnam or undergo only minimal final assembly before being exported to the US.

Washington previously accused Vietnam of relabeling Chinese goods to evade US tariffs, but Chinese raw materials are vital to Vietnam's manufacturing sector.

Capital Economics stated: "From a global perspective, the most intriguing aspect of this agreement seems to be its strong connection to China."

Capital Economics pointed out that the provisions regarding transshipped goods "will be seen as provocative by Beijing, especially if any other agreements reached in the coming days also include similar conditions."

Martin, a business consultant in Hanoi at Dezan Shira & Associates, said: "This is much better than the 46% tariff, but I'm not rushing to celebrate right now. Everything now depends on how the US interprets and implements the transshipment tax plan."

Bloomberg Economics estimated that in the medium term, this agreement could reduce Vietnam's exports to the US by a quarter, and the impact on Vietnam's economy would exceed 2% of its GDP.

Sajedi, an expert at Bloomberg Economics, noted that the uncertainty surrounding how "definition or implementation" of the transshipment tariff could cause diplomatic consequences.

She emphasized: "The pressing issue right now is how China will respond. Beijing has shown it will respond to this agreement that sacrifices China's interests."

Original: https://www.toutiao.com/article/1836627115315203/

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