The US has announced a 46% of “discounted” reciprocal tariff on Vietnam, one of the highest among the other Southeast Asian nations, and it will come into effect from April 9. The USA’s toy, apparel, and furniture industry could expect a major hit as it heavily depends upon Vietnam for manufacturing.
Vietnam is currently charging 90% of tariffs on US imports.
The trade ministry and leaders of Vietnam will be presenting a report on how these tariffs are impacting the country’s economic growth and exports.
Vietnam’s Prime Minister Pham Minh Chinh said that he would make a dedicated task force to deal with this situation correctly. He also said that tariffs would not reflect a good relationship between the two nations, as reported by state broadcaster Vietnam Television.
Vietnam will keep the GDP growth estimate unchanged even after the tariff announcements. The country’s estimated GDP growth is 8%, and no corrections have been made to it after the tariff news.
The USA’s and Vietnam’s Trade Statistics
The USA imports were registered at $146 billion, and Vietnam’s surplus in this trade is above $123 billion. 30% of Vietnam’s GDP contribution comes from U.S. exports, and the USA is the largest export market for them.
The former deputy director of the Vietnam Institute for Economic Management, Dr. Vo Tri Thanh, said, “It’s the shock for the global economy and for the Vietnamese economy; it will negatively impact Vietnam’s economy.”
How its affects the brands like Nike?
Big brands like Nike will be impacted very badly by this tariff. Nike alone has 450,000 workers and 159 factories across Vietnam which produces its high-quality products. With 46% of the new tax, the company will have to pay more to bring the products to USA.
Other giants like Adidas and Lululemon will also be facing similar problems as they also have a lot when it comes to manufacturing in Vietnam. A level of hesitation among consumers can be anticipated in future with regard to purchasing these brands
Moving or shifting the production would also not be an easy way for these brands as it will not only impact their cost but also the quality of products as the workers in Vietnam are trained and skilled with regards to making high-quality shoes and apparel.