Will China ship half-finished products to Vietnam to escape 25% tariff on its products levied by the US?
Vietnamese companies are concerned about the escalating US-China trade war as they fear possible adverse impact on their business. The US recently raised tariffs on US$200 billion worth of Chinese products to 25 per cent from 10 per cent and has started the process of slapping tariffs on another $300 billion worth of Chinese goods. In retaliation, China has announced higher tariffs on thousands of US goods.
Many Chinese have shifted their investments to Vietnam to avoid the impact of the trade war. However, the shift also ushers challenges to Vietnamese companies as they shall face fierce competition from the Chinese companies in terms of economies of scale and prices.
The second aspect bothering Vietnam enterprises is that the Chinese manufacturers could ship half-finished products to Vietnam for finishing and exporting to the US under Vietnamese labels. Vietnamese companies feel that they should abstain from such scenario because, as if the US detects this, it might impose taxes on Vietnamese products as well.
However, the HCM City Union of Business Associations, feels that Vietnam would benefit from the increase in the trade war in terms of exports. The trend of Chinese and other foreign firms switching their investments from China to other markets, including Vietnam would provide a boost to many sectors in Vietnam.
As per the Foreign Investment Agency, this year China has been the biggest foreign investor in Vietnam with US$1.3 billion in 187 projects and $116 million in existing ones.China News US Vietnam