Vietnam's response to U.S. tariffs: cracking down on China trade

Vietnam is taking significant steps to address U.S. concerns over Chinese goods transshipped through its territory, in a bid to avoid harsh tariffs. In response to U.S. scrutiny, including from trade advisor Peter Navarro, the Southeast Asian nation is tightening controls on both Chinese goods shipped to the U.S. under “Made in Vietnam” labels and sensitive exports to China. This move aims to reduce Washington's trade deficit with Vietnam, which has been facing the threat of a 46% tariff on its goods. Although the tariff is suspended for now, trade talks are underway.

In a government announcement on April 11, Vietnam pledged to combat "trade fraud," although specifics were not provided. Hanoi is aiming to prevent illicit transshipment, where goods from China are rerouted through Vietnam to lower tariffs, a practice that has raised alarms in Washington. The country's trade ministry is working to implement measures to curb such activities, with plans for further regulation by late April.

Vietnam’s efforts to protect its trade relationship with the U.S. come at a time when it must also balance its ties with China. China remains a key economic partner and source of investment, despite ongoing territorial disputes in the South China Sea. The Vietnamese government has also initiated new measures to control sensitive exports to China, particularly dual-use goods like semiconductors, which could be used for military purposes. These controls, aimed at complying with U.S. requests, are part of Vietnam’s broader effort to navigate its relations with both global powers.

In addition to regulatory changes, Vietnam has taken steps to foster stronger cooperation in the technology sector, notably facilitating Starlink’s satellite communication services, which were approved under favorable terms. Meanwhile, upcoming meetings, including a visit by Chinese President Xi Jinping, are expected to further shape Vietnam's diplomatic and trade trajectory, including potential approvals for Chinese-made aircraft to be used by local airlines.