The Vietnam Trump Agreement targets China, and asks more questions than answers

US President Donald Trump announced a trade agreement with Vietnam on Wednesday, but its small details left the economists asking about what this means to flow the Chinese goods that have been redirected across the country.

Trump said on Wednesday There will be a 20 % tariff on the goods from Vietnam and 40 % of “Transstiping” on the goods that originated in another country and transferred to Vietnam for the final shipping to the United States

Chinese manufacturers used Transshiping to avoid huge definitions on their direct shipments to the United States, using Vietnam as a major Energy center.

White House Trade Adviser, Peter Navarro, claimed that about a third of Vietnam exports are redirected by China and described Vietnam as a “colony in Communist China” in an interview with Fox News in April.

Yao Jin, associate professor of the supply chain management at Miami University, said this last deal is a clear blow against these re -directed charges from China.

But the enforcement of the targeted fees on the transition will be a difficult task for Hanoi, as it will have to determine the scope of what will qualify as “made in Vietnam” and what is the transfer.

“If this applies only to pure transport – goods from China to the United States via Vietnamese ports, without any local association – there should not be any impact on Vietnam,” said Frederick Newman, the chief economist in Asia at HSBC on Friday.

However, if the 40 % tariff applies to “all Vietnamese goods that have a minimum share of Chinese components, the disturbances may be large,” said Newman.

Likewise, Dan Wang, director of China at the Eurasia Group, said, “It is not clear how this will work – the burden on Hanoi is to issue certificates of the rules of origin – and the level of Chinese components, if this is the scale, it will be considered too much.”

With more Chinese manufacturers moved to Vietnam from the first time of Trump, Vietnam’s surplus with the United States has multiplied more than three times to a A record number of 123.5 billion dollars Last year of less than $ 40 billion in 2018, According to the American Census Office.

Many Southeast Asian countries had it Benefit From the last trade war in the United States of China during the first period of Trump by working as alternative centers for manufacturing and export.

Lin Song, Chinese chief economist in Engy, said that the ruling governed by a country for his exposure to the markets of the United States and China, will be determined more commercial deals through a country of a country for the United States and China markets, the level of transportation activity in that country, and the implications of local industries.

Shipping from China to many Southeast Asian countries this year has risen to a record level, Chinese customs data showedand When the exporters have transferred shipping to alternative markets for sale to local markets or transport to the United States

If the commercial deals Vietnam and the United Kingdom indicate any signal, it is possible that future deals of the United States with other countries include measures to configure transport, increase purchase obligations for American goods and “provisions aimed at pressure on China,” said Stephen Olson, previous US trade negotiations and a large colleague at the IShaf-Yusof Institute,

The strict security requirements for steel and pharmaceutical preparations in the United States deal widely are considered to be an attempt to pressure China from the British supply chain.

The country’s Ministry of Commerce said on Thursday that it was “Evaluation” From the agreement, he urged other countries not to request an agreement with Washington at the expense of China’s interests.

Olson added that China will likely see that Washington is using “mutual tariff negotiations to obtain third countries to try to pressure China outside the supply chains.” Beijing is expected to pressure the countries so that it does not spread in the demands of the United States and this practice declines in negotiations with Washington.

However, Beijing is likely to start taking any concrete action until the details of the deal are clarified, while experts are waiting, while they are waiting to find out how commercial deals for other countries are formed.

“The stirring on the table on one commercial deal will be unknown.”

In recent days, the United States and China have followed a large number of restrictions against each other in honor of the commercial consensus reached in Geneva, Switzerland, in May. Washington has since lifted export restrictions on ethane, chips design programs and jet engine parts, while Beijing has been appointed fast approvals for rare land exports.

Both sides have reached a commercial framework Last month after talks in London, which are still valid until mid -August, where Chinese goods are currently facing a tariff of about 55 %.

The United States and Vietnam deal also indicates that the customs tariff eventually on Chinese goods is unlikely to fall under a 40 % threshold, according to Nick Maru, the main economist in the Economic Intelligence Unit, as low duties on the direct shipment of China can encourage companies to turn production there, undermining the broader Trump administration’s goal to curb Chinese industrial capabilities.