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The United States Has Launched An Investigation Into Exchange Rate Manipulation To Impose Tariffs On Vietnam. Enterprises Investing In Vietnam Should Pay Attention To It

2020/10/10 10:37:00 0

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Us Exchange Rate Manipulation Investigation Vietnam Levy Tariff

An investigation will be conducted into Vietnam's "practices, policies and practices that may lead to undervaluation of its currency and the consequent damage to U.S. Commerce.". On the evening of October 2, the office of the United States Trade Representative (USTR) officially announced that it would launch a "301 investigation" on Vietnam's timber and exchange rate policies. According to the instructions of US President trump, the US trade representative will investigate Vietnam's import and use of "illegal logging or illegal trade" timber, as well as behaviors, policies and practices that may lead to the devaluation of Vietnam's currency and damage to U.S. Commerce.

U.S. trade representative laissez said Vietnam's use of illegal wood to make wood products and then export them to the U.S. market has damaged the business environment and is "unfair" to American workers and enterprises who abide by the rules and use legal logging. However, when it investigated the US Treasury's foreign exchange rate manipulation of 22 billion US dollars, it did not use the US Treasury's investigation on the exchange rate manipulation. Such behavior will devalue a country's currency and make its goods cheaper on the international market.

The same legal justification allows the trump administration to impose tariffs on imports of about $370 billion a year from China The Sino US trade confrontation has lasted for more than two years The main means used by the United States.

Before approving a tariff, the United States must conduct an investigation, give public time to comment and write a report, a process that takes months. For China, the investigation took more than six months to complete the report, and another three months for the tariff to come into effect. This means that the decision to push ahead with tariffs on Vietnam could fall on those who won the US presidential election in November.

The United States imposed punitive tariffs on Vietnamese imports

In this regard, the Xinhua news agency in Washington pointed out that this move may lead to the escalation of trade friction between the United States and Vietnam, and make the United States impose punitive tariffs on Vietnamese imports. The Wall Street Journal reported on the 2nd that, In the exchange rate assessment conducted in August this year, the U.S. Treasury found that Vietnam had lowered its currency exchange rate in 2019. This provides a basis for the US Department of Commerce to impose punitive tariffs on Vietnamese tires in the investigation of anti-dumping and countervailing duties on Vietnamese passenger car tires.

"Unfair" exchange rates would hurt us workers and businesses competing with Vietnamese products, which could be "artificially priced lower" because of undervalued exchange rates, lethizer said.

According to Vietnamese media reports, in the first nine months of 2020, Vietnam exported 8.97 billion US dollars of timber. In addition, Vietnam also expects that Vietnam's timber export this year may exceed 12.5 billion US dollars, an increase of 18% over the same period last year. The United States is one of Vietnam's largest timber export destinations.

Vietnam seeks greater cooperation with EU

Under the influence of the epidemic, Vietnam's economy, especially export-oriented, suffered heavy losses. Since April, the impact of the epidemic on Vietnam's exports began to show. Vietnam's exports fell 14% year-on-year in April, according to the General Administration of customs. In May, Vietnam's exports fell by 12.4% due to the stagnation of the global industrial chain. From January to July 2020, exports grew by 1.5%, compared with 8% last year.

According to the U.S. Department of Commerce, imports from Vietnam have grown rapidly in recent years, from $14.9 billion a decade ago to $66.6 billion last year. At present, the United States is the largest exporter of Vietnam. From January to July 2020, Vietnam's export to the United States slowed down, and its export to the United States only increased by 14.6%, half of the growth level in 2019.

To avoid tariffs and other tensions between China and the United States, or to seek lower labor costs, Vietnam has been a popular destination for manufacturing industries leaving China. In recent years, Vietnam has been deeply involved in the global supply chain. Companies such as Intel, Samsung Electronics and LG Electronics have set up factories in Vietnam and employed millions of workers. As a result, the average annual salary of Vietnamese workers has increased from $1154 in 2008 to about $2800. Samsung Electronics Vietnam branch's export volume of electronic products in 2019 accounts for about 20% of Vietnam's total exports. According to Vietnam's Ministry of industry and trade, Samsung has revised its export forecast for 2020 to US $45.5 billion, down US $13.5 billion from 2019.

The epidemic also has an impact on the automotive sector. The association of Vietnamese automobile manufacturers (Vama) estimates that the demand for automobiles will drop by 28% in 2020 from a year earlier. Wu Zhilong, a Vietnamese economist, also said that if the epidemic continues, the market demand for automobiles will continue to be depressed, and factories and auto retailers in Guangnan and Danang will be seriously affected. Vama estimates that Vietnam's auto industry will experience a negative growth of 15% in 2020. If the epidemic is still out of control, car sales will plummet to their lowest level in 10 years.

Facing the severe situation of export, Vietnam is seeking more export opportunities, and the EU is expected to become the bright spot of Vietnam's future export. Vietnam expects that after the EU Vietnam trade agreement takes effect, Vietnam's exports to the EU will increase by 20% in 2020 and double by 2025. In addition, wages for skilled workers are expected to rise by 12% and help lift about 800000 people out of poverty.

The EU Vietnam trade agreement has entered into force on August 1,

Vietnam is the second largest trading partner of ASEAN after Singapore In 2019, the bilateral trade in goods was 45.5 billion euro, and in 2018, the bilateral trade in services was about 4 billion euro.

As long as any country is getting bigger and bigger from the U.S. market, it will inevitably be suppressed by the U.S. government through various means. Vietnam is China's next target to be hit. Entrepreneurs investing in Vietnam need to be prepared in advance.