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Vietnam's trade boom stimulated by China, raising concerns for US

Vietnams trade boom stimulated by China raising concerns for US


The US-China trade war, marked by tariff hikes, has led to a surge in US imports from Vietnam. However, Vietnam's success in capturing market share from China comes with a twist: it relies heavily on Chinese inputs for its exports.

Statistics reveal a clear picture. Vietnam's trade surplus with the US increased to nearly $105 billion in 2023, more than double the figure in 2018. US imports from Vietnam more than doubled since 2018, exceeding $114 billion in 2023. Moreover, there's a strong correlation (96 per cent) between the value of Vietnam's imports from China and its exports to the US. China remains the primary source of raw materials and components for Vietnam's manufacturing sector, with electronics being the most prominent example (80 per cent import content).

The symbiosis

This situation creates a complex scenario.  The rise in US-Vietnam trade reflects the movement of manufacturing facilities from China to Vietnam. This trend is likely driven by companies seeking to avoid US tariffs on Chinese goods. However, despite the relocation, China's role in the supply chain remains crucial. Vietnam heavily relies on Chinese imports for its exports almost one-third of Vietnam's overall imports originate from China. The significant trade imbalance with Vietnam might raise concerns in the US, especially after the upcoming elections. This could lead to a policy change towards Vietnam, potentially including tariffs. The US may view Vietnam as a loophole for Chinese goods to bypass tariffs. Also, Vietnam's dependence on raw materials from Xinjiang, a Chinese region with alleged human rights violations, puts additional pressure on the situation. Vietnam has already faced scrutiny from the US on this issue.

A lot of questions remain unanswered: So, will the US address the growing trade imbalance with Vietnam? How can Vietnam reduce its dependence on China for raw materials and components? Can Vietnam ensure its exports are not linked to human rights violations in Xinjiang?

Table: US-Vietnam trade 


US imports from Vietnam ($ bn)

Vietnam trade surplus with US ($bn)
















As Vietnam seeks market economy status from the US, requiring a balanced trade relationship, higher US scrutiny could disrupt Vietnam's export-driven growth model. The US may have to choose between tamping down the trade gap and potentially raising import costs for consumers.

Vietnam's trade success is intricately linked to China. While it has benefited from the US-China trade war, its heavy reliance on Chinese components and potential human rights violations in its supply chain raise concerns for the US. The upcoming US elections and Vietnam's ability to address these concerns will be crucial in determining the future trajectory of its trade relationship with the US.



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