Liza Lin, Jason Douglas, and Rebecca Feng of The Wall Street Journal report that Vietnam attracted manufacturers wanting to avoid China tariffs during Donald Trump’s first term, but they could soon find themselves in the line of fire. They write:
Vietnam found the sweet spot in the global economy during President-elect Donald Trump’s first trade war with Beijing: smack in the middle of the U.S. and China.
The country became a magnet for Chinese manufacturers looking for a production base from which to ship their goods to the U.S. tariff-free.
Now, as the incoming administration girds for new battles over trade, Trump and his team are signaling that they intend to slam this backdoor shut.
Such a move would hurt Vietnam’s small but rapidly growing economy, and likely mean higher prices for U.S. consumers who buy Vietnamese goods and U.S. companies supplied by Vietnamese factories. Since Trump placed tariffs on Chinese goods six years ago, Vietnam has expanded around 8% a year, buoyed by a gusher of foreign investment and booming exports to the U.S.
The country now supplies a third of the sports shoes, half of the wooden beds and dining tables, and a quarter of the solar cells imported by the U.S. […]
Vietnam also has problems with corruption and a shortage of skilled manpower. And it still relies heavily on components and intermediate goods from China. This lack of an ecosystem for components has sent business looking into neighboring countries such as Thailand, which have more local raw material manufacturing, or sometimes even back to China.
Jake Phipps, CEO of furniture, toilet fixtures and lighting supplier Phipps International, shut a Vietnam factory that made medicine cabinets and mirrors because he couldn’t find reliable local parts suppliers and had to import everything from China. […]
“China’s quality is way superior at the end of the day,” he added.
Read more here.
