The US-China trade war is escalating sharply. In the most recent move, the US imposed a 10 per cent tariff starting from Monday on US$200 billion of Chinese imports. These tariffs will then rise to 25 per cent on January 1. In retaliation, China has decided to impose taxes on about $60 billion worth imports from the US together with the publication of a white paper about US trade frictions. For Viet Nam, the trade war will bring opportunities and risks. Viet Nam News reporter Mai Linh talks with industry associations about possible impacts of a trade war between the world’s two largest economies on their industries.

Huynh Van Hanh, Vice Chairman of Handicraft and Wood Industry Association of HCM City

Huynh Van Hanh

The US-China trade tension will certainly affect the economic recovery momentum, especially of countries with weaker economies. Viet Nam can not avoid the spiral. The trade war will more or less affect economic growth in the short term but in the long term it will not have a significant impact on production and exports because Viet Nam is not in the supply chain of China.

Risk for one person is opportunity for others. The question is how to grasp that opportunity.

Our attitude, from the perspective of the timber industry, is we should be receiving the trade tension with caution rather than joy because the US and China are both big markets for Viet Nam wood products. The long-term impacts are unpredictable.

China is the world’s largest furniture exporter, accounting for 35 per cent of global furniture export revenue. The furniture industry of China recorded revenue of US$125 billion in 2016, in which wood products accounted for 64 per cent. China is the leading exporter of wood products to the US. In this trade war which the US imposes taxes on China’s wood products, the market opportunities will be spread to other countries, including Viet Nam.

At the same time, Viet Nam could have the opportunity to buy engineered wood and timber from China at lower prices thanks to more supply, because China’s production is anticipated to fall.

As well as opportunities, there are risks.

China’s export products to US were mainly consumer goods. The US’s imposition of tax on China’s export goods will push up prices and US consumers must consider their spending, which could result in slower economic growth in the remaining months of this year and even the coming year.

When consumers cut spending, this will significantly impact the consumption of wood products in the US because wood products are not necessities.

Meanwhile, China must seek import markets for its wood products with exports to the US struggling because the tax might cut its market share in the US. In this situation, China will shift its production to other countries in an effort to avoid taxes.

Vietnamese firms should stay alert for this and not get involved because if detected, the US might impose taxes which will harm the local industry.

There may be no absolute winner of this trade war.

To prevent risks, Vietnamese producers should enhance control over origins of export products, especially wood products. The US has very strict regulations about the legality of timber.

In addition, close watch should be placed on the development of the trade war to grasp opportunities and avoid risks.

Firms also need to keep calm and strive to enhance productivity, quality and competitiveness as well as reduce costs.

Le Hang, Deputy Director of Viet Nam Association of Seafood Exporters and Producers’ Training and Trade Promotion Centre cum Head of Market Information Division

Le Hang

The seafood industry of Viet Nam will have both opportunities and challenges from the US-China trade war.

The opportunity is that the trade war will create market gaps when exports of China to the US decrease due to the tax imposition, which Vietnamese firms could take advantage of to boost exports to the US.

In my opinion, Viet Nam’s fishery sector has significant opportunity to increase exports of shrimp, tuna, tra and basa fish to the US.

Specifically for shrimp, with the tax imposition, the trade flow of shrimp between the US and China is slowing down. Countries which supply shrimp for China and the US will benefit, including Viet Nam.

Several shrimp products of China are taxed by the US and these products are of Viet Nam’s strength.

In addition, Vietnamese shrimp has a position among US consumers. Thus, when the shrimp supply from China decreases, it likely US importers will choose Vietnamese shrimp instead.

However, raw material shrimp exports of Viet Nam to China might fall because China’s shrimp processing and exports are anticipated to decrease.

For tra and basa fish, Viet Nam has opportunities to boost exports of these products to the US as China’s export of tilapia to the US is declining following the tariff imposition.

China’s tilapia has dominated the US whitefish imports for many years. In 2017, Chinese tilapia accounted for nearly 45 per cent of the US’s import value of whitefish while basa and tra only take 25 per cent.

The drop of Chinese tilapia in the US gives hope for other whitefish suppliers to export to the US, despite difficult conditions imposed by the US’s catfish inspection programme.

During the trade war, the two large economies might erect stricter technical barriers for Vietnamese export products. The US will tighten control over the origin of Vietnamese products exported to this market over doubts Chinese shrimp firms might export shrimp under the origin from Viet Nam.

Firms, however, should regard this as an opportunity for Vietnamese firms to enhance product quality and competitiveness, promote trade activities and take advantage from the free trade agreements.

No less important, origin transparency is critical to gain the market share left by China in the US.

Firms should also stay updated about the list products subject to tariffs by China and the US as well as the exchange rates of US dollar and Chinese yuan.

Firms should look into the market and seize opportunities but should not expect too much from the trade war. — VNS