Meanwhile, the US is considering recognizing Vietnam as a market economy, which analysts believe will be a great opportunity for Vietnam to boost exports to the country. 

Additional tax on Chinese goods

The White House on May 14 announced that the US President Joe Biden has decided to hike the tariffs on a high number of imports from China, such as electric vehicles, computer chips and medical products. Of these, the tax rate on electric vehicles is 100 percent, or four times higher than previously.

The tariff on photovoltaic cells used to manufacture solar panels has been raised from 25 percent to 50 percent, while steel and aluminum products will bear the tariff of 25 percent instead of zero percent. 

As such, the new taxation policies will affect $18 billion worth of Chinese goods exported to the US.

Meanwhile, the taxation on $300 billion worth of imports from China imposed by Biden’s predecessor – Donald Trump – remains unchanged.

The US-China trade war kicked off in 2018 and despite the taxation, the imports from China still have been flooding the US market. In 2023, the US imported $427 billion worth of products from China, while it exported only $148 billion worth of products to the market.

The White House said the decision on additional taxation is made because of unacceptable risks for the US economic security. Recently, the US Senate Banking Committee Chairman Sherrod Brown even has proposed that Biden prohibit Chinese electric vehicles because they pose a risk to Americans' personal data.

According to Washington Post, Trump plans a huge economic blow on China, possibly imposing the tariff of 60 percent on all goods imported from China, if he once again takes the post of the US President in the next tenure.

At present, Chinese economy is facing big difficulties because of low domestic demand and long-lasting real estate crisis. However, these are just post-Covid problems and Beijing’s efforts to restructure the economy. In long term, China is still considered a big powerhouse with the vast domestic market, developed production, low-cost and highly competitive products. 

Today, China has a high number of large corporations of international stature. Chinese BYD is leading the world in terms of sales, surpassing Elon Musk’s Tesla.

The economic capability gap between the US and China has been narrowed and the US’ position is being threatened.

What’ll Vietnam’s economy like?

The world in the last few years has been witnessing the investment relocation and big changes in global supply chains as a result of the Covid-19 pandemic and the US-China trade war. Multinationals tend to relocate their production bases out of China.

Vietnam, the economy with high openness and the membership of a series of bilateral and multilateral FTAs (free trade agreements), now has the chance to become the destination for international investment flow. The upgrading of its relationship with a series of the world’s leading economies such as China, the US, Japan, India and Australia will help Vietnam boost its exports to the economies.

The US Department of Commerce on May 8 heard testimony on whether to designate Vietnam as a market economy. This is an important hearing for the US to consider granting the upgrade to Vietnam on July 26.

Ted Osius, head of the US-ASEAN Business Council affirmed that Vietnam is already a market economy

Experts said Vietnam has met 6 key criteria set by the US Department of Commerce to be recognized as a market economy. 

The market economy status, if this gets approval, will have positive impacts on Vietnam’s export to the US as tariffs will be cut sharply, thus paving the way for Vietnam’s exports to see a new wave of increase in the time to come.

Recently, many Chinese large corporations have accelerated investment in Vietnam. In late March, Hainan Drinda, the photovoltaic cells manufacturer, said it will set a $450 million factory in Nghe An, Vietnam.

In February 2024, Trina Solar Cell obtained the investment certificate from Thai Nguyen provincial authorities for a project capitalized at $454 million. The project will manufacture modules and solar panels. Prior to that, $478 million dollars had been injected into two projects. Chinese and American are dominating the Vietnamese solar panel market. BYD has also announced the plan to set up a factory in Vietnam.

Manh Ha