Nearly 80 of the largest US business organizations have asked the US Trade Representative not to use tariffs as a means of resolving trade disputes with Vietnam amid reports that the Biden Administration may tax goods imported from Southeast Asian country.
In a joint letter to U.S. Trade Representative Katherine Tai, 76 organizations — including the American Chamber of Commerce, the National Retail Federation and the Internet Association, which include members like Amazon and Google, present expressed concern about reports that the US Trade Representative (USTR) may be about to issue a list of imports from Vietnam that the Biden Administration would propose to tax under Section 301 under the following investigations by the Trump administration into Hanoi’s “currency manipulation” and use of “contraband timber.”
“Imposing the Section 301 tariffs at a time when the Treasury Department (US) recently stated that Vietnam is not a currency manipulator would undermine efforts to develop a stricter framework for financial diplomacy, American business organizations, from food to furniture to fashion,” wrote in the letter, which VOA viewed, sent to Ms. Tai on July 14. According to the groups, “such a move would embarrass foreign governments” and thereby reduce Washington’s influence internationally.
The USTR did not immediately respond to VOA’s request for comment on whether it will soon release a list of items imported from Vietnam that are proposed to be taxed.
The USTR is investigating the import of Vietnamese timber that it suspects is illegally harvested or traded while the administration of President Joe Biden is said to be considering whether to move forward with imposing tariffs on the goods of Vietnam because of its monetary behavior or not.
Although Vietnam was removed from the list of currency manipulators in April, the USTR concluded that Hanoi’s monetary behavior was “unreasonable” and, according to trade experts, this paving the way for punitive tariffs under Section 301 of the US Trade Act of 1974. The Biden administration has until October to decide whether to impose tariffs, which marks one year from the USTR’s initiated investigations into the currency pricing behavior and origin of Vietnam’s timber at the request of President Donald Trump in early October last year.
The US is Vietnam’s largest export market and also has a growing trade deficit with the Southeast Asian nation, which hit a record close to $70 billion last year. This large trade deficit is believed to be the main reason for the Trump administration to conduct an investigation into the trade practices of Vietnam, currently the 13th largest trading partner of the US.
But according to the organizations writing in the letter, the increase in imports from Vietnam over the past few years is largely due to the US’s imposition of Section 301 tariffs on hundreds of billions of dollars worth of goods from China. This, they say, has led American importers to look to Vietnam, more than any other country in Asia, as a credible alternative to China.
Hundreds of leaders of US multi-industry associations and companies in January this year also sent a letter to President Trump asking not to impose tariffs on Vietnamese goods under Section 301. The State Bank of Vietnam has always said that its monetary policy is not intended to create an unfair competitive advantage in international trade.
Vietnam is a major export market for U.S. job-creating industries such as textiles, chemicals, hardwoods, aviation, and energy and environmental products. According to the organizations, in the letter – also addressed to the heads of the Department of Finance, the Department of Trade and the Department of State – the raw materials imported from Vietnam are the essential inputs that American manufacturers use in finished products. Therefore, according to them, US exports “will almost certainly be the target of retaliatory tariffs if the Administration (Biden) imposes tariffs on Vietnamese goods.”
The move, John Goyer, director of Southeast Asia at the American Chamber of Commerce, told VOA in an interview last week, would also have “a pernicious effect” on US businesses operating in Vietnam because it reduces their competition due to the high prices of products when taxed.
American business associations argue that there is insufficient evidence that Vietnam has engaged in illegal practices related to currency manipulation or the use of timber, and that the tax decision will undermine its relationship with Vietnam. An increasingly important partner for the US as the US wants to engage more in the region to contain Chinese influence.
“If the Administration (Biden) has concerns about elements of the U.S. trade relationship with Vietnam, then there needs to be cohesion, not more tariffs,” the officials said.