Economists have expressed concern about the impact on Vietnam’s economy if the second US tariff package of $200 billion is ratified after September 6, saying that Vietnam’s GDP may decrease by 0.03 percent because of the trade war.
The VCCI’s (Vietnam Chamber of Commerce and Industry) latest report on the US-China trade war says the war will have a long-term impact on Vietnam’s trade and investment.
On one hand, Vietnam will be able to take advantage of the high tariffs that the US and China impose on each other’s goods to boost its exports to both countries. The tension between the two countries may also offer opportunity for Vietnam to lure more investments from the US.
The trade war, however, would also cause a negative impact. Chinese goods, which would find it more difficult to enter the US market, will head for other markets, including Vietnam. Vietnam may see the trade deficit become even more serious with China.
VCCI commented that in the long run, if the war is widespread, things may become unpredictable. The shift of trade flows to alternative markets would have both negative and positive impacts on small economies like Vietnam’s.
It is estimated that Vietnam would see its GDP decrease by 0.03 percent this year, and by VND6 trillion each year.
Meanwhile, Tran Toan Thang from the National center for Socio-economic information and forecast (NCIF) showed his concern about the impact on Vietnam’s foreign investment.
Thang said the US adjustment of the tax law may make American companies investing in Vietnam reconsider their investment strategies, or prompt them to transfer profits made in Vietnam to the US instead of expanding investment in Vietnam.
If so, the foreign invested enterprises in Vietnam will also be affected, which means that the competitiveness of the investment environment would decline.
Pham Chi Lan, a respected economist, believes that the trade war between the US and China will escalate, especially if the US wants to prevent China’s plan on hi-tech exports that would compete directly with the US by 2025.
Vietnam is the biggest importer of Chinese goods, while the US is the biggest export market for Vietnam. When conflicts occur with the two biggest markets, this will cause a negative impact.
“Vietnam is the fifth biggest market which enjoys a surplus in trade with the US. Therefore, if Vietnam becomes a country for Chinese products to transit before going to the US, it is very likely to bear economic sanctions,” Lan warned.
Mai Chi report on VNN