Trump is pressuring trading partners to decouple with China


The U.S. has presented Vietnam with a comprehensive and challenging set of demands in ongoing tariff negotiations, with a key focus on reducing Vietnam's reliance on Chinese supply chains, according to Reuters. This push aligns with U.S. concerns about Vietnam's role in transshipment, where Chinese goods are allegedly rerouted through Vietnam to evade U.S. tariffs, a practice Washington wants Hanoi to curb. Vietnam's economy, heavily dependent on exports to the U.S.—its largest market, accounting for about 30% of its total exports—faces significant pressure, as a 46% tariff could jeopardize 5.5% of its GDP

Vietnam has shown willingness to negotiate, offering to cut tariffs on U.S. goods like LNG, automobiles, and ethanol, and to increase purchases of American defense and agricultural products. However, the demand to decouple from Chinese supply chains is particularly complex, given Vietnam's deep economic ties with China, which supplies 60% of the fabrics for its garment industry and critical components for its manufacturing sector, including for companies like Samsung and Apple. Despite efforts to crack down on transshipment, Vietnam's trade with both the U.S. and China hit record highs in April, highlighting the challenge of balancing these relationships

Negotiations are ongoing, with a 90-day tariff pause until July providing a window for talks, but the U.S. demands pose a serious challenge to Vietnam’s export-driven economy, which relies on Chinese inputs for products like electronics and apparel. The outcome remains uncertain, as Vietnam navigates its strategic position between the U.S. and China

Ashish Ghosh is a NCFM certified research analyst for the global and Indian financial markets. With more than 15 years of experience in the capital market, Ashish has been published in high-profile online media regularly. He holds a B.Sc. in Math along with NCFM certification for Technical and Fundamental analysis. Presently, he is working with iForex as a financial analyst/content writer since 2017, analyzing mainly the global and Indian markets. You can reach him for professional levels trading ideas or signals through Gmail/telegram ID: ashishghoshjpg/asisjpg

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