In an attempt to bypass tariffs, Vietnam plans to crack down on the shipment of Chinese goods being shipped to the US via its territory.
Countries had been working on plans to bypass the Trump tariffs months before the Republican candidate won the US presidential election. But no one could have anticipated the scale to which these tariffs would throw the global economy into chaos.
Asian countries, in particular, are in quite a pickle as they are at the receiving end of not just Trump tariffs but the decline in the Chinese economy is bound to bring their growth levels down too. In an attempt to bypass these tariffs, Vietnam plans to crack down on the shipment of Chinese goods being shipped to the US via its territory.
Reuters has reported that Vietnam is also tightening its controls over sensitive exports to China. Senior U.S. officials, notably prominent White House trade advisor Peter Navarro, expressed concerns about Chinese goods being transported to America with “Made in Vietnam” labels that carry reduced import duties.
Hanoi was hopeful that given its huge trade surplus with the US, President Trump would be lenient in his approach and spare the Southeast Asian country from his tariff tirade. However, on Liberation Day, the Trump administration announced a slew of additional duties on various countries and Vietnam was slapped with a 46% tariff imposition.
According to US data published in February, Vietnam’s trade surplus with the world’s largest economy was at a record high in 2024, which analysts described as a complication in its efforts to avert trade tariffs. The data revealed that Vietnam occupies the fourth place in trade imbalances with Washington but had pledged to expand its imports from the US, so it could be spared of import tariffs.
Mere hours after Trump tariffs were announced, an emergency meeting was held by Vietnam’s Government Office, a body that coordinates between its ministries and government trade experts. The US had raised concerns over alleged intellectual property theft and transhipment abuses which the Vietnamese government wanted to investigate.
The export-reliant Vietnam was put in a difficult position over these allegations, as it did not want to antagonise China, with whom it already shares a precarious relationship due to disputes regarding the South China Sea. However, friendship with the US is also too precious to jeopardize, as it is Hanoi’s important trading and security partner.
In the meeting trade ministry and customs officials were instructed to tighten controls and have been given two weeks to come up with a plan to prevent illicit transhipment. Illicit transhipment is the practice of one country sending exports to another country facing lesser tariffs from a third country which imports these goods without having value added to it.
Since Trump’s first presidency, several MNCs have adopted a ‘China plus one’ policy, wherein they set up manufacturing facilities in Vietnam to avoid being reliant on Beijing. In recent years, much of Vietnam’s exports to the US are what retailers have imported from Chinese companies. The Southeast Asian exporting nation has also been accused of harbouring ships carrying Chinese goods just long enough to obtain documents stating that these products were actually produced in Vietnam.
Hanoi officials will also impose stricter regulations on sensitive goods flowing through its domestic territory from the US to China. These measures will particularly be extended to dual-use goods like semiconductors, which have civilian as well as military purposes.
Knowing fully well that leadership in the development of artificial intelligence is a major priority for the US government, Vietnamese authorities are resolved to introduce new declaration and approval procedures for the trading of products like chips and semiconductors, after Washington announced that it would be cutting off China’s access to the most advanced US-made chips.
Along with these measures by the government, Vietnam’s financial and business sectors are also doing their part to ensure their country is not subjected to high tariffs. Vietnam has signed a number of aerospace deals with US companies, to expand the country’s airline sector. More companies will soon enter coveted partnerships with US companies to expand their businesses and stave off import duties. While Vietnam is trying to appease the US, it is treading a tightrope in not trying to incur China’s wrath. Needless to say, this dynamic has certainly brought an interesting twist to the international system.
