Vietnam is increasingly caught up in Donald Trump’s protectionist trade policies. The culprit is its trade surplus with the US — on track to reach $50bn this year. In June the US president berated the country for treating it “even worse” than China on trade, and imposed huge tariffs on some of its steel imports. Vietnam responded, like China and the EU before it, by committing to increased purchases of US goods. This commitment was reiterated again recently while Hanoi also joined the US in banning Huawei from supplying 5G telecoms equipment.
Yet unlike these vast $13-14tn economies Vietnam is a $240bn economy with per capita income just two-fifths of that in China. Subjecting Vietnam to the same arbitrary US trade policies as larger, richer economies with more capacity to respond must be avoided.
Export growth across Asia has collapsed this year amid the ongoing US-China trade spat and weaker global growth. Vietnam is an exception. Exports have continued to increase, albeit more slowly than last year. Components such as phones, computers and electronics, have all recorded strong growth and exports to the US, long Vietnam’s top trade partner, have outperformed. Yet despite the steady rise in Vietnam’s export capacity over the past decade it still accounts for less than 3 per cent of US imports, far below the 17.5 per cent from China.