No Trump Tariffs on Vietnam, but USTR Finds Hanoi’s Currency Practices ‘Actionable’
The Office of the U.S. Trade Representative won't impose Trade Act Section 301 tariffs on Vietnam imports in the remaining days of the Trump administration for Hanoi’s allegedly improper devaluation of the dong against the dollar, said the agency Friday. USTR did find Vietnam’s practices “actionable” under Section 301 and "will continue to evaluate all available options,” it said.
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The decision to forgo tariffs was sure to bring welcome relief to the companies, trade associations and business groups that vehemently opposed them in recent weeks, including a majority of those testifying in a Dec. 29 virtual hearing (see 2012290034) and the more than 200 CEOs who addressed a direct appeal Jan. 7 to President Donald Trump (see 2101080023). Critics argued tariffs would cause profound damage to the U.S. economy due to Vietnam's significant and growing role in the global supply chain (see 2101100001).
“Unfair acts, policies and practices that contribute to currency undervaluation harm U.S. workers and businesses, and need to be addressed,” said departing USTR Robert Lighthizer. “I hope that the United States and Vietnam can find a path for addressing our concerns.” The finding that Hanoi’s currency behavior was actionable under Section 301 technically leaves the legal door open to tariffs or other remedies under the Biden administration.
The “facts and circumstances” examined in the Section 301 investigation “support a finding that Vietnam’s acts, policies, and practices related to currency valuation, including excessive foreign exchange market interventions and other related actions, taken in their totality, are unreasonable,” said USTR’s investigative report. Hanoi’s currency behavior works to “burden or restrict U.S. commerce within the meaning” of Section 301, said the report. Devaluing the dong against the dollar “effectively lowers the price” of Vietnamese imports to the U.S., it said.
That makes them “less expensive than they would otherwise be" without the currency manipulation, undermining "the competitive position” of U.S. firms that are competing with those imports, said the report. Currency undervaluation also raises the price of U.S. exports to Vietnam, undermining “the competitive position of U.S. firms in the Vietnamese market,” it said.
Excessive foreign exchange intervention undertaken when Vietnam has a significant trade surplus with the U.S. “also undermines U.S. export opportunities,” said the report. USTR critics argued at the hearing that the Trump administration’s Section 301 policies created Hanoi’s trade surplus with the U.S. when tariffs on Chinese goods forced U.S. importers to shift sourcing to Vietnam.
The Information Technology Industry Council hails USTR’s decision not to impose tariffs on Vietnam, said Senior Director-Policy Sam Rizzo, who testified against Section 301 duties in the virtual hearing. ITI urges the incoming administration to "refrain from imposing tariffs on Vietnam and instead rely on a strategic, whole-of-government approach that uses bilateral engagement to tackle concerns around currency valuation,” said Rizzo.
The U.S. Chamber of Commerce has been "steadfast in our opposition" to tariffs since it was announced they were "under consideration," said Executive Vice President-International Affairs Myron Brilliant. "Trade actions are an inappropriate means by which to address currency valuation questions." The "precedent set forth" putting a currency dispute under Section 301 jurisdiction for the first time "is worrisome to our members," he said.