Flexibly respond to the US reciprocal tax “shock”

Unexpected and unpredictable developments

Currently, the city has 22 enterprises exporting products to the US market. In 2024, the export turnover of goods to the US will be nearly 192.3 million USD, accounting for 11% of the city's total export turnover, with the main export items being rice, seafood, agricultural products and processed agricultural products, garments, handicrafts, steel and steel products. Of which, garments and seafood will be greatly affected when the 46% tax rate comes into effect.

Processing pangasius for export to the United States at Caseamex.

Mr. Ha Vu Son, Director of the Department of Industry and Trade of Can Tho City, commented: The 46% tax rate will increase the cost by nearly half, causing goods to lose their competitive advantage in price compared to countries that are not subject to tax or subject to lower taxes. The city's businesses may be forced to sharply reduce the amount of exported goods or temporarily stop exporting to the US market in the short term to avoid losses. This will lead to an expected decrease in Can Tho City's export turnover to the US in the last quarters of the year. On the US side, partners may postpone or cancel orders due to concerns that the tax will increase prices. Thus, the city's export growth may be affected in the near future. However, in the short term, US businesses may continue to import goods from Vietnam because they have not found an alternative market, and this is an opportunity for the city's businesses to grasp and take full advantage of.

According to Mr. Ngo Van Chon, Deputy Director of Tay Do Garment Joint Stock Company, on average, Tay Do Garment exports to the United States about 1 million USD each year, accounting for about 25% of the company's revenue. Despite the impact of the US tax, the company is still looking for ways to overcome difficulties, maintain production to pay regular salaries and maintain the number of workers. "Exporting to the US market is the desire of most businesses because of large orders and good prices. When the US market fluctuates, the whole world fluctuates. Before the news that the US temporarily postponed taxes for 90 days, the company tried to work with partners and customers to complete signed orders to quickly export. During these 3 months, Tay Do Garment will be very busy. However, this is a short-term joy. In the long term, Tay Do Garment has planned for the worst case scenario, because if the 46% tax rate is applied, it will be difficult for any garment products to be exported to the US."

In the seafood sector, Mr. Phan Hoang Duy, Deputy General Director of Can Tho Seafood Import-Export Joint Stock Company (Caseamex), shared: “Caseamex currently exports pangasius products to more than 30 markets, of which the US market accounts for over 50% of total output. That shows that the US is the most important market, leading and capable of dominating other markets. If the US imposes a 10% tax on all seafood products and all countries, Vietnamese pangasius will remain stable and less affected because there are few competitors. However, the shrimp industry will have difficulty when facing competitors such as Ecuador, India, Indonesia, etc. In addition to reciprocal taxes, this market also has anti-dumping taxes, the US is also planning to impose government subsidy taxes, so businesses will face a lot of pressure.”

Flexible response

At the conference, businesses expect Vietnam to be successful in negotiating with the United States to get a reasonable tax rate. The United States is a large global market but not the only one. Businesses in the city are making efforts to shift and diversify their markets to cope with the reciprocal tax policy in the next 3 months. Mr. Ngo Van Chon emphasized: The company is committed to not only retaining workers but also focusing on improving workers' skills and implementing many solutions to reduce production costs, thereby improving internal capacity. Along with that, focusing on developing the domestic market with the Tay Do brand that has been built over the past 20 years. Tay Do Garment proposed that the city recommend that the Government pay attention to industries with a large workforce and great influence such as garment, agriculture and aquaculture during the negotiation process; at the same time, prevent and strictly handle the problem of fraud of goods origin.

According to Mr. Phan Hoang Duy, Caseamex is currently promoting market diversification, reconnecting with old partners in Europe, Canada, Brazil, Japan, Australia, etc. Caseamex proposed that the People's Committee of Can Tho City consider supporting a number of issues related to land rental fee reduction; VAT refund; promoting trade promotion so that businesses have conditions to access and expand the market, etc. According to experts, businesses still have nearly 3 months to prepare, at this time businesses should calmly analyze, monitor the new tax policy situation of the United States and find solutions to restructure production and business activities, reconsider investment plans for next year. At the same time, it is necessary to proactively transform green, transform digitally, transform products according to each market segment; focus more on the proportion of domestic materials in the certificate of origin to meet the requirements of the United States.

Speaking at the conference, Mr. Duong Tan Hien, Permanent Vice Chairman of Can Tho City People's Committee, assigned the Department of Industry and Trade, the Department of Finance, and the Management Board of Export Processing and Industrial Zones of the city to record and accept recommendations and proposals from enterprises to consider which contents are under the authority of the city and submit to the Central Government issues beyond its authority. At the same time, monitor and closely follow the directions and instructions from the Central Government to promptly advise the City People's Committee on solutions to support enterprises in responding to reciprocal taxes. In addition, relevant departments and branches support enterprises in improving the reputation, added value, and competitiveness of domestic goods; strictly handle the situation of fraudulent origin of goods. On the part of enterprises, they continue to promote the spirit of dynamism and creativity to find solutions to respond well to both good and bad scenarios from the US reciprocal tax policy.

Article and photos: MY THANH

Source: https://baocantho.com.vn/linh-hoat-ung-pho-cu-soc-thue-doi-ung-cua-hoa-ky-a185518.html