Trump’s Vietnam Deal Stokes Asia Concern as Trade Deadline Looms – Bloomberg

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1. SS: Summary: Trump’s Vietnam Deal Raises Alarm Across Asia Amid Looming US Tariff Deadline

   Key Points:

   US-Vietnam Deal: President Trump has imposed a 20% tariff on Vietnamese imports, and a 40% rate on goods transshipped through Vietnam, mainly targeting Chinese goods routed via Vietnam. In return, Vietnam agreed to zero tariffs on US goods.

   India’s Concerns: Indian officials are worried the Vietnam deal sets a tough precedent as they negotiate to avoid steep US tariffs before a July 9 deadline. India is particularly concerned about:

   A lack of exemption on reciprocal tariffs.

   US pressure to impose higher tariffs on goods with significant foreign (especially Chinese) components.

   Tighter rules of origin to prevent trade fraud.

   Broader Asian Response:

   Thailand sees the deal as a signal of a new trade order that rewards domestic value creation.

   Indonesia, however, is largely unaffected by transshipment concerns and announced $34 billion in US trade/investment pacts to preempt tensions.

   Singapore’s officials warn that high US tariffs are becoming permanent, requiring firms to adapt supply chains despite increased costs.

   China’s Reaction: While official response remains measured, analysts expect retaliation from China, possibly including tariffs on Vietnam if it’s seen as siding with the US.

   Strategic Context:

   Asian nations are heavily reliant on China for imports and the US as an export market.

   The deal marks a strategic shift in US trade policy, aiming to dismantle China’s rerouting tactics via third countries like Vietnam, India, and Thailand.

   Business Impact: Companies exporting to the US may have to segregate production lines to comply with stricter US conditions, increasing operational costs.

   India’s Situation: India hopes to avoid the Vietnam-level tariff but acknowledges that Trump’s “America First” stance is uncompromising. The outcome of India’s negotiations with the US will likely shape future trade dynamics in the Indo-Pacific region.

2. Maintaining pressure on China by taxing “middle-man” countries that Chinese companies route their goods through to avoid tariffs makes sense, but is hard to know how effectively it can be implemented.

   In countries with higher corruption indexes and weaker institutions, it wouldn’t be that hard to skirt. Im guessing there is an implied threat of “if we think you’re trying to get around this we’ll just put the tariffs on you too.”

3. How much does the US import from Vietnam vs how much they export?

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