Lao Dong had an interview with Associate Professor Dr. Nguyen Thuong Lang - National Economics University - about opportunities, challenges and recommendations for Vietnam's economy.
Sir, what changes will the world economy have after the US increases import taxes?
- The new US tariff policy, with a 25% tariff on goods from Canada and Mexico, and a 10% tariff on goods from China, could have significant impacts on the global economy. These changes will not only affect trade relations between the US and other countries, but also affect global supply chains, international investment and economic growth prospects of many countries.
There could be a major shift in the world economic order, with trade flows shifting towards fewer exports to the US market. This could lead to higher prices in the US and higher production costs, while prices in the rest of the world could fall due to oversupply and fierce competition, forcing the global economic structure to adjust.
Only highly competitive industries with strong supply chains will survive, while weaker industries will retreat from the US market. At the same time, new supply chains will form to adapt to tough trade policies, which could slow the recovery of global economic growth after the pandemic.
Free trade areas will also have an opportunity to play a role, absorbing trade diversion and creating trade linkages beyond the United States, such as in Europe, the Pacific region, South America, the Middle East, and Africa. Increased fragmentation of the world economy will entail higher adjustment costs.
What opportunities will Vietnam have when the US increases import taxes on the above countries, especially for import-export activities and attracting investment capital, sir?
- Vietnam is facing a great opportunity to increase its exports to the US market. Vietnam's key industries, such as textiles, electronics, agricultural products, and seafood, have the opportunity to increase their exports to the US. Access to the US market also means that Vietnamese businesses can build their brands and increase the added value of their products.
In parallel, with the impact of the new US tax policy, Vietnam can also access cheap goods from China, Canada and Mexico - where goods will be in stock because they cannot be exported to the US.
The new US tax policy is likely to boost investment flows from China to Vietnam. This will create opportunities for Vietnam to attract high-quality investment, bringing new technology and management skills. Through cooperation with Chinese companies, Vietnam can not only learn and apply new technology but also improve the competitiveness of its export products. These investment channels can also open up opportunities for Vietnamese enterprises to participate in the global supply chain, thereby enhancing Vietnam's position on the international economic map.
What are Vietnam's challenges when the US applies a 25% tariff on goods from Canada and Mexico, along with a 10% tariff on goods from China?
- Mr. Trump’s “America First” policy may lead to protectionist actions, making it difficult for Vietnamese exports to enter the US market. Even the application of strict regulations on the origin of goods may cause Vietnamese goods to face certain risks, creating a major barrier in competing with other countries. When the US increases import taxes on goods from other countries, the possibility of measures such as anti-dumping taxes, anti-subsidy taxes and self-defense measures will be higher.
As Vietnam adjusts its strategy to accommodate new elements of US trade policy, it may face significant costs, including not only the cost of complying with new regulations but also the cost of training, technological innovation, and adjusting production processes to improve competitiveness.
Furthermore, businesses will also have to spend a large amount of money on developing new strategies to build brands and find new consumer markets, in order to minimize the impact of US tax policies.
Sir, what actions do Vietnamese businesses need to take to adapt?
- In the context of the US imposing new tariffs on Canada, Mexico and China, Vietnam needs to have appropriate strategies to adapt more flexibly to the global trade situation, ensuring sustainable development for the economy.
The Vietnamese government needs to have a flexible foreign policy, strengthen comprehensive cooperation with the US, and encourage Vietnamese businesses to diversify export markets. In particular, there needs to be a mechanism to closely monitor the US government's moves, and build a reserve fund to support businesses when necessary.
Vietnamese small and medium enterprises need to join together to increase synergy, increase resilience, stabilize the supply chain, find partners, and share risks. There needs to be close coordination between enterprises and the Government in warning, sharing information, and proposing appropriate policies.
Thank you!
