All of the U.S.’s biggest business organizations, from food to the fashion sector, have deemed it necessary to request the country’s trade chief to stop using tariffs as a strategy against Vietnam. This is primarily because trade disputes with Vietnam do not bode well for the businesses operating in America.
The letter was sent on July 13, 2021, Tuesday to U.S. Trade Representative Katherine Tai. The group stated that in case there are problems between both the countries with their trading relationship, then in that case what they need is proper engagement and not more tariffs. Around 76 groups have combined their efforts on taking a stand against Vietnam tariffs, including, The National Retail Federation, United States Chamber of Commerce, and the Internet Association – a group that boasts Amazon.com Inc. and Apple’s Google as one of its members.
For some time, USTR (The Office of United States Trade Representative) has been involved in an investigation involving imports of Timber from Vietnam, which are suspected to either be illegally harvested or traded. Due to this, U.S. has been wondering whether to go ahead with imposing tariffs or not.
In January, the country had labeled Hanoi’s currency action as unreasonable, which was followed by punitive tariffs under Section 301, Trade Act 1974. The government will need to decide on the decision of tariffs till October.
The U.S. is known to be Vietnam’s biggest export market, wherein the value of shipments coming to the country has increased by 100% over the last five years. In addition, Hanoi is considered to be Washington’s 13th largest goods trading partner. The trade associations in their letter have argued that there is little evidence that Vietnam was involved in illicit activities, and the increased tariffs will only result in hampering the relation with a valued trading partner.
In recent years, Vietnam has started becoming an alternative to China with the imports of raw material and industrial products coming from the country. They have emerged to be the key inputs for U.S. manufacturers. However, if tariffs are imposed on these products, then it will impact the competitiveness of U.S. goods in the international market.
The stalemate situation between the country’s trade association government and the government remains will only move forward after a decision on whether to impose tariffs or not is taken. However, if tariffs are imposed, then it will be bad news for businesses based in America that have already faced the impact of the pandemic and yet haven’t fully recovered.