Trade tension arises on March since the Trump administration proposed tariffs of $US50 billion ($66 billion) on Chinese goods and said it might extend the levies to an additional $US150 billion ($199 billion). China responds with its own measures targeting US agriculture.
The trade war between the world's two biggest economies, according to Pham Sy Thanh, Director of Chinese Economic Studies Program, Vietnam Institute for Economic and Policy Research (VEPR), if bursts out, can create opportunities and challenges for third countries.
“The entire global trade system is now organized in production chains located in many countries. Hence, the real risk of trade wars is the spreading effect they induce over numerous countries rather than just over a group of nations,” specified Thanh. Moreover, the clash of the two great powers will set a precedent for other countries to follow, amid the growing trend of protectionism and nationalism worldwide, said Thanh.
The trade diversion, on the other hand, is likely to change the trade balance of a third country if the “fighters” want to make a bypass to enter the enemy’s playground. A case to be mentioned is that, China’s steel is supposed to have been rerouted, going through Vietnam before entering the US market during 2016-2017. “If this happens, Vietnam may be listed in the same group with China and face more difficulties in improving its export quality and quantity”, Pham Sy Thanh of VEPR told Hanoitimes.
Analysts still believe in potential gains for Vietnamese companies in case of a real trade war between China and the US. “If Chinese exports to the US in certain product categories face higher tariffs, there will be opportunities for Vietnamese producers to fill that gap and displace Chinese exports”, said Stephen Olson of Hinrich Foundation.
“It is important to note however that the tariffs have not yet gone into effect, and have not even been officially finalized. But if tariffs are ultimately applied on product categories where Vietnamese companies are competitive, such as consumer goods, footwear, or apparel, there could be greater opportunities for Vietnamese companies”, Stephen Olson, Hinrich Foundation, Hong Kong wrote in an email to Hanoitimes. The likelihood of the US rejoining the TPP also create chances for Vietnam firms in the case, the Hong Kong-based economist said.