Associate Professor, Dr. Nguyen Thuong Lang: The impact on growth is not too great.

Regarding the US applying a 46% reciprocal tax rate to Vietnam, a reporter from the Industry and Trade Newspaper had an interview with Associate Professor, Dr. Nguyen Thuong Lang, an international economics and trade expert, senior lecturer at the Institute of International Trade and Economics, National Economics University.

- Could you please assess the possible impacts of the US applying a 46% reciprocal tax rate to Vietnam?

Associate Professor, Dr. Nguyen Thuong Lang. With the 46% tax rate that President Donald Trump's administration applied in the case of Vietnam, with Vietnam's current export turnover to the United States, the United States will initially collect about 30 - 40 billion USD in tax from Vietnam.

However, reciprocal taxes are only a part because the two sides already have a trade agreement.

The export turnover to the US market in recent times shows that Vietnamese goods are very suitable for the US market. Vietnamese goods are increasingly prestigious because of their high quality, accepted by US consumers.

The tax here is based on the view that the US believes it is necessary to be fair, to reduce the trade deficit. This can lead to the fact that Vietnamese exports to the US, including key products, have quite high prices, about 1.5 times higher, if other factors are not fully taken into account.

Associate Professor, Dr. Nguyen Thuong Lang said that Vietnam needs to continue diversifying its export markets.

This price increase may lead to a decrease in the competitiveness of Vietnamese goods, leading to a decrease in demand as well as congestion and congestion of goods due to inability to enter. This may cause businesses to have to reduce their production facilities or transfer goods to other markets or sell goods in a “rescue” manner. At this time, goods may be in stock, causing the supply chain to be narrowed. Thus, the responsibility of businesses becomes increasingly heavier.

Furthermore, this reciprocal tax by the US could lead to an increase in the US CPI, affecting the country's inflation.

- What actions should Vietnam take to respond to the current situation?

Associate Professor, Dr. Nguyen Thuong Lang. In that context, the problem for Vietnamese enterprises is to continue to save on management costs, raw materials, energy or to come up with a plan to reduce prices for US importers.

The government has a role in continuing to improve the business environment, reduce administrative costs, reduce "informal" procedures, inspection, supervision, and logistics.

At the same time, negotiate with the United States to purchase US goods, reduce the trade surplus with the United States such as liquefied gas, gas turbines, technological equipment, medical equipment, agricultural products, means of transport, etc.

- Does the application of this reciprocal tax have much impact on Vietnam's 8% growth target this year, sir?

Assoc. Prof. Dr. Nguyen Thuong Lang. The application of a 46% reciprocal tax rate may cause Vietnam's exports to the United States to decrease this year. Given Vietnam's export level, this figure may not be very large, but as mentioned above. The GDP growth target in 2025 may be affected, but not too much. In such a context, Vietnam needs to expand other export markets to compensate for the decrease, although not too large, in the US market.

Thank you!

Vietnamese businesses need to continue to save on management costs, raw materials, energy, or possibly come up with plans to reduce prices for US importers.

Quang Loc

Source: https://congthuong.vn/pgs-ts-nguyen-thuong-lang-tac-dong-den-tang-truong-khong-qua-lon-381641.html