Jun 17, 2019 / 12:29

Vietnam slaps tariffs on Chinese aluminum seeking haven in US-China trade war

Vietnam is taking drastic measures to prevent the shipment of Chinese products labelled "Made in Vietnam".

Vietnam has imposed tariffs on aluminum from China in a latest move to curb the import of this kind of product which seeks a shelter to avoid the US-China trade war. 
Inside a Vietnamese aluminum plant. Illustrative photo
Inside a Vietnamese aluminum plant. Illustrative photo
Indeed, Vietnam currently imposes temporary anti-dumping tax of 2.46% to 35.58% on several Chinese aluminum products for 120 days, according to VOA's Ralph Jennings.

Chinese manufacturers shipped their products to Vietnam to label them “Made in Vietnam” then export to the US to avoid being taxed in China following the taxation package which the US President Donald Trump’s administration has placed on Chinese products for the second consecutive year.

Hanoi-based financial market research company SSI Research called Vietnam’s newly-imposed tariffs “a very bold move for Vietnam.”

It also praised the anti-dumping tariffs as an “efficient” answer from the Vietnamese side to US tariffs to be placed on aluminum products exported from Vietnam but manufactured in China.

Over the last years, Vietnam has absorbed a large share of the Chinese aluminum due to joint land border and low manufacturing costs, said Song Seng Wun from CIMB in Singapore. 

But economists believe the rising imports from China had hurt Vietnam’s own aluminum industry and risked sharper US government examination.

Chinese exports of semi-finished aluminum parts doubled in 2018 to 62,000 tons, of which, a “significant quantity is believed to be shipped from China to avoid anti-dumping and countervailing tariffs,” VOA News quoted a report by SSI Research.

Vietnam needs broader moves

SSI Research calls the tariffs “a very bold move for Vietnam to enact” as “a country that has emerged as the region’s largest beneficiary nation of the (Sino-U.S.) trade war,” according to VOA News. 

As reckoned one of top beneficiaries last year of the Sino-US trade dispute, tariff-weary shippers based in China were tapping the country as an alternative, low-tariff place to manufacture exports headed to the US. 

“Some US imports were detected supposedly coming from Vietnam, but were found to be actually Chinese products, which were thereby trying to avoid anti-dumping duties that were applied to Chinese products in the US,” said Rajiv Biswas, Asia-Pacific chief economist at market research firm IHS Markit.

“As far as the Vietnamese are concerned, it’s just criminal, just taking advantage of their position, smuggling in and smuggling out,” said Frederick Burke, lawyer from international law firm Baker McKenzie. “It’s ruining their reputation and they get no benefit out of it.”

If Vietnam did not impose its own tariffs, Washington would most likely investigate specific companies suspected of exporting Chinese aluminum from Vietnam and “order customs officers to pay closer attention to goods with certificates of origin from Vietnam,” said Maxfield Brown, senior associate at business consultancy Dezan Shira & Associates in Ho Chi Minh City. 

The Ministry of Industry and Trade will decide before year’s end whether to extend the tariffs after a series of public “consultations”, according to SSI Research.