Trump consultants argue that steep tariffs are required on countries such as Vietnam and Cambodia to erase trade deficits and re -extinguish supply chains. The economy says this will be a long shot
US President Donald Trump hid some of the highest tariff rates for Southeast Asia on the Day of Independence Day. Economists were waiting to see some targets such as production of Hub Vietnam on Trump’s tariffs list. Other goals, such as neighboring Cambodia, were more surprising and all of them were shocked by the upright tariffs given to the region and usually extended to a 40% range.
April 2 launched a struggle based on growth exports in Southeast Asia. Both Vietnam and Cambodia have already offered to cut tariffs in US imports. However, the probability of alleviating everyone under Trump is low. Trade Advisor Peter Navarro accused Vietnam points to the country’s value -added tax and the use of Chinese manufacturers to escape the US tariffs, Vietnam points to the country’s value -added tax. Trade Secretary Howard Lutnick Discusses Vietnam’s great trade surplus,
Nevertheless, Navarro is a fully balanced trade with countries like Lutnick and Trump – such as Vietnam. These countries promised to buy more US goods such as airplanes or energy. However, in fact, these Southeastern Asian countries are not rich enough to buy consumer goods enough to balance their exports.
According to the World Bank, Cambodia’s GDP per capita was slightly over $ 2,400 in 2023, compared to $ 82,800 for the USA
This is nothing that will make Vietnam or Cambodia’s Trump administration happy and make upright tariffs a permanent part of trade with Southeast Asia.
Why did Donald Trump apply such steep tariffs to countries like Vietnam, Cambodia and Laos?
Vietnam, Cambodia and Laos export more than they import to the United States. Considering the Trump administration “salvation day” tariffs – the core calculated in total imports, developing production centers such as Vietnam would always receive high tariffs.
Adam Ahmad Samdin, a Singapore -based economist in Oxford Economics, including Asian economies, said, “As a result, it was described as an estimated tariff rate to reduce the trade balance of mutual tariffs to zero,” he said.
This means that Trump’s tariffs have nothing to do with Vietnam or Cambodia’s obstacles imposed on the United States. showy Vietnam’s simple average tariff rate was only 9.4%.
Technology products for electronic exports such as laptops, mobile phones and video game consoles to both Vietnam and Cambodia, US Vietnam; Cambodia exports solar panels. Both export fast -moving consumer goods such as clothing, shoes and bags. Laos, the neighbor of Cambodia and Vietnam, exports both solar cells and fast -moving consumer goods such as shoes and textiles. (Laos received 48% tariff ratio last week, while Vietnam and Cambodia received 46% and 49% respectively).
“The reason why Southeast Asian economies are the best target [for manufacturing] Indeed, the cost of labor force labor force, according to the amount of skills of the labor force, Sam said Samdin. “ The an average American worker has many times higher. “
What will happen next?
Supreme US tariffs are a major threat to growth that benefits from approaches to a “China plus” supply chain diversity in Southeast Asia.
In a recent report, DBS shows that US tariffs can reduce Vietnam’s economic growth by 2.5 percent; Singapore Bank initially estimated 6.8% growth for the Southeast Asian country this year.
In contrast to China’s more aggressive retaliation to Trump tariffs, economists think that most of the Asian economies will try to negotiate with the United States. In a recent report, Nomura wrote, “The US exports to Asia is small in quantum, which gives less leverage to the region,” Nomura wrote. The Japanese finance company thinks that countries will offer more US goods, increase investments in the United States and expand market access to US companies.
As of now, while Vietnam offers to eliminate tariffs in US imports, Cambodia is already cut A number of US products up to 5%tariffs.
However, since these countries do not import more than the United States, the underlying trade imbalance is low.
Vietnam imported 13.1 billion dollars of goods from the United States last year. In contrast, Vietnam sent $ 136.6 billion on the other hand, more than 10 times the purchase.
According to Vietnam’s government data, Vietnam’s biggest purchases from the United States were computers and electronic products, machinery and instruments. The country probably imported these products to support electronic production.
In a statement released Late on Monday, Hanoi urged the US to delay the implementation of tariffs to ensure time for bilateral negotiations. Vietnam’s Prime Minister Pham Minh Chinh showed that the country is ready to increase the purchases of defense and security, and that he will also try to address the monetary policy concerns of Washington.
Cambodia and Laos, which are largely two agricultural economies, import less than US Cambodia, imported 321.6 million dollars from the United States last year; Laos, who imports only $ 40.4 million from the USA, is even smaller than the USA
On the contrary, Cambodia exported $ 12.7 billion to the United States, while Laos exported $ 803.3 million.
The best US imports of Cambodia and Laos are not consumer goods such as automobile or electronics. Instead, fuel and mechanical equipment.
“These economies do not really have much purchase power, Sam Samdin said. He added that these countries may not need or want the United States – and even if they do it, it may not be “at a price point where manufacturers will be willing to sell”.
This story initially took part in Fortune.com
