[Text/Observer Network Wang Yi] Faced with the "reciprocal tariff" announced by U.S. President Trump last week, Vietnam, one of the countries most affected globally, has extended an olive branch to the United States, indicating its willingness to cancel import tariffs on American goods. However, the U.S. appears indifferent to this gesture.

On April 7 local time, Peter Navarro, Senior Advisor for Trade and Manufacturing at the White House, stated in a program on CNBC that although Vietnam has proposed zeroing out import tariffs on American goods, this is not enough to make the U.S. government revoke the tariffs.

On April 7 local time, Peter Navarro, Senior Advisor for Trade and Manufacturing at the White House, appeared on a CNBC interview. Video screenshot.

Navarro claimed that Vietnam's proposal of zero tariffs "means nothing to us" because "non-tariff fraud is the key issue." He cited examples such as Vietnam acting as a transshipment hub to evade U.S. tariffs, dumping products into the U.S., providing export subsidies, and stealing intellectual property from the U.S....

"The focus should be on anyone who comes to talk to us about how to reduce non-tariff barriers!" Navarro openly admitted that besides zero tariffs, the U.S. wants more.

Perhaps feeling smug about Vietnam's submission, Navarro later said that Vietnam's proposal would be a "small beginning."

"Tariffs will fundamentally strike at Vietnam's export-oriented economic model."

Starting April 9, Vietnam will face a 46% "reciprocal tariff," one of the highest among all countries globally. Such a high tariff has left the country shocked and worried. After the announcement of the U.S.'s intention to impose tariffs on Vietnam, the Ho Chi Minh Index fell by 7%, marking the largest single-day decline in over 20 years.

"Tariffs will strike at the root of Vietnam's export-oriented economic model," the Economist magazine analyzed on April 7. In recent years, Vietnam has seen a surge in manufacturing investments; its low-cost and well-educated labor force has attracted manufacturers to relocate there. Data shows that over the past decade (excluding the pandemic period), Vietnam's average annual growth rate was around 7%. Exports to the U.S. account for 30% of Vietnam's total exports and 27% of its nominal GDP (Gross Domestic Product).

The magazine further noted that some companies have also implemented the so-called "China+1" strategy, dispersing production bases to neighboring countries and regions like Vietnam. Good railway connections with China and a favorable business environment have attracted enterprises to invest in Vietnam. For instance, Samsung Electronics and Apple product assemblers have built production facilities in Vietnam.

However, this also means that Trump's tariffs could be devastating for Vietnam's economy. Oxford Economics simulated the impact of tariffs on Vietnam under the "best-case scenario," assuming no U.S. economic recession, no retaliation from trade partners, and no disruption to investment due to uncertainty. By 2026, Vietnam's output will be 3.5% lower than it would have been without the tariffs.

The Economist estimates that this is roughly equivalent to cutting Vietnam's growth rate in half. Moreover, tariffs undermine the rationale for businesses investing in Vietnam under the "China+1" strategy. The tariff gap between China and Southeast Asia has narrowed, reducing the motivation for enterprises to shift production capacity out of China to avoid tariffs.

"If zero tariffs are implemented, Vietnam's annual loss would be at most $1 billion."

Fearing crisis, Vietnam has already been trying various ways to please Trump in hopes of avoiding the impact of tariffs. According to the Economist, before Trump announced the full implementation of "reciprocal tariffs," Vietnam had signed a trial contract with Elon Musk's high-bandwidth satellite internet service "Starlink" to begin construction in May or June. In March, Vietnam unilaterally announced reductions in tariffs on U.S. liquefied natural gas, automobiles, energy, and agricultural products. Recently, several Vietnamese state-owned and private enterprises signed agreements to purchase equipment from the U.S.

The Trump Organization plans to invest $1.5 billion in a comprehensive project including urban areas, ecotourism, sports, and high-end golf courses in Hung Yen Province, Vietnam, with construction scheduled to start next month. Prime Minister Pham Minh Chinh of Vietnam expressed attention towards the project in March, stating that relevant Vietnamese departments will conduct a thorough review to expedite the project's implementation, and Vietnam will continue efforts to optimize administrative approval processes.

After Trump officially announced the tariffs, General Secretary of the Communist Party of Vietnam Central Committee and State President Suu Linh called Trump on April 4. Trump described the call as "very productive," noting that Suu Linh "told me that if an agreement can be reached with the U.S., Vietnam wishes to reduce tariffs to zero." Vietnam's statement was more cautious, with Suu Linh suggesting that Vietnam and the U.S. negotiate zero tariffs on each other's goods.

The New York Times reported on April 6 that Suu Linh was one of the first world leaders to contact Trump after he announced the tariffs. On May 5, Suu Linh sent a letter to Trump requesting that the imposition of tariffs be delayed by at least 45 days to allow both sides to take measures to avoid actions that might severely harm Vietnam's economy or increase prices for American consumers.

Nguyn Khc Giang, a researcher at the Institute of Southeast Asian Studies in Singapore, stated that some people within the Vietnamese government believe that now is the right time to negotiate a broader trade agreement with the U.S.

Can Vietnam secure the deal they want? The Economist believes that if Trump's worst protectionist instincts prevail, Vietnam may not have many cards to attract Trump.

Giang estimated that in the 12 months ending in March this year, Vietnam imported $16 billion worth of goods from the U.S., averaging a 3% tariff. If zero tariffs were implemented, Vietnam's revenue loss annually would be at most $1 billion. This may not necessarily appease Americans.

The Economist analysis points out that even if an agreement cannot be reached soon, Vietnam may still have a glimmer of hope. On one hand, foreign direct investors are unlikely to immediately withdraw. Their fixed costs are high and require several years to relocate. They will not abandon these projects until they clearly determine which destinations might be better than Vietnam, and Trump's chaotic decision-making is likely to delay this process.

On the other hand, if Vietnam's export-oriented growth model is severely impacted, its currency, the Vietnamese Dong, may depreciate further, enhancing Vietnam's competitiveness in alternative markets such as Europe. Analysts at Oxford Economics noted that the Vietnamese Dong is closely linked to the U.S. dollar, a common choice for smaller economies dependent on trade. However, the State Bank of Vietnam (Vietnam's central bank) may need to let the Dong depreciate to counteract the tariffs.

Nevertheless, if tariffs continue to be imposed, it will be a disaster for both the U.S. and Vietnam. The Economist notes that tariffs not only threaten Vietnam's 8% growth target for 2025 but also endanger the country's rise plan. For the U.S., Trump's tariff policy may push Vietnam closer to its northern neighbor, which is clearly not what the U.S. would like to see.

This article is an exclusive contribution from Observer Network and cannot be reprinted without permission.

Original source: https://www.toutiao.com/article/7490778855762821632/

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