Vietnam tariffs: US to decide on new tariffs by Nov 29

The News

The Office of the US Trade Representative must decide by Nov 29 whether to impose new tariffs on Vietnamese goods, when its investigation into Vietnam's intellectual property enforcement ends. Tesla and Samsung's US unit have urged officials to consider the supply chains they operate in Vietnam.

Vietnam currently faces a general 12.5% US tariff, set in July after a separate forced-labor probe. The rate was 20% before the Supreme Court struck down the emergency tariffs.
Tesla asked trade officials to “take into account the supply chain needs of American manufacturers.”

The details

The investigation began in May, after the US designated Vietnam a “priority foreign country” for intellectual property violations. It was the first country to receive that designation in 13 years. US Trade Representative Jamieson Greer said infringement in Vietnam “continues to impair the competitive position of US innovators and creators.”

The Business Software Alliance, whose members include Microsoft, Oracle and IBM, says about three-quarters of PC software in Vietnam is unlicensed, citing a 2017 survey.
The Motion Picture Association says piracy sites in Vietnam drew more than 12.5 billion visits worldwide last year.
The US is also investigating excess production capacity in a separate probe that includes Vietnam.

The investigation has divided businesses. Companies that manufacture in Vietnam want to avoid new tariffs, while US producers competing with Vietnamese imports are pushing for them.

Tesla said some advanced components and precision manufacturing equipment cannot be sourced in the US. Samsung's US unit said Vietnam produces a significant share of the smartphones and network equipment it sells in the US.

Samsung is Vietnam's largest foreign investor, with about $25 billion invested there.
Retail groups and associations representing footwear, apparel, consumer goods, bicycles and video game consoles also oppose new tariffs.
US industry groups representing steel, seafood, plywood, solar panels and wood products have called for new duties.

The stakes are higher because US imports from Vietnam have nearly caught up with imports from China. The US imported $237 billion in goods from Vietnam in the 12 months through July, compared with $271 billion from China. In early 2017, those totals were $43 billion and $467 billion, respectively.

In April, US imports from Vietnam topped imports from China for the first time in Census data going back to 1992, at $20.4 billion versus $19.8 billion.
Vietnam's exports to the US rose 42% in the first eight months of the year.
Vietnam now has the largest goods trade surplus with the US of any trading partner, ahead of China and Mexico.

Worth noting

Vietnam has resolved earlier US trade investigations without facing tariffs. Two previous Section 301 probes, covering its currency and timber trade, ended without sanctions after Vietnam reached agreements with the US.