How might Vietnam be affected when the US imposes a 46% tax?

According to expert Nguyen Tri Hieu, the US is an export market worth up to 119 billion USD/year for Vietnam. According to the new tax rate, Vietnam will have to pay a tax of up to 54 billion USD, equivalent to 10% of GDP. Mr. Hieu commented that this is a very heavy tax rate.

" The US is a major export market for Vietnam. If the US imposes a tax rate of up to 46% on 90% of goods exported from Vietnam to the US, it can be said that almost all Vietnamese goods exported to the US will be subject to the highest tax rate in the world. I am afraid that this will affect Vietnam's double-digit growth target this year ," Mr. Hieu further emphasized.

Previously, according to analysis by KBSV Securities Company, about 50% of Vietnam's GDP and employment depend directly or indirectly on exports (according to WorldBank), in which the US market accounts for 30% of total export turnover. " We estimate that in the event of reciprocal tariffs imposed by the US, Vietnam's GDP will decrease by 0.7 - 1.3% compared to the baseline scenario. A report by Goldman Sachs shows that Vietnam's GDP will decrease by about 1.5% if Vietnamese goods are subject to a reciprocal tariff increase of about 13% ," KBSV's report stated.

The US imposes 46% reciprocal tax on imported goods from Vietnam. (Illustration photo)

Responding to the impact of the US's reciprocal tax move that will take effect from April 9, most economic experts said that it will certainly have a strong impact on Vietnam's export industry.

Dr. Le Duy Binh, Director of Economica Vietnam, predicts that the most affected industries are furniture (especially wooden furniture), textiles, footwear, agricultural products, seafood, electronics...

" If taxes increase, the price of imported goods to the US will increase. It is worth noting that the US tax rate on Vietnam is higher than other economies exporting the same goods to the US. This will reduce the competitiveness of Vietnamese goods because prices will increase. This is the most obvious impact ," said Mr. Binh.

Agreeing with this view, expert Nguyen Tri Hieu said that Vietnam is more heavily affected than some countries that are direct competitors. According to the new tax rate table, Vietnam is subject to a higher tax rate of 10-20%.

“ I often go to the US and see that many products originating from Vietnam are circulating in this market, including from fields such as garments, electronics, leather shoes, etc. With high tax rates, in the future, American businesses can choose these products from other countries with lower tax rates. This may cause FDI enterprises in Vietnam to change direction and look to neighboring countries for investment ,” said Mr. Hieu.

With the new tax rate, Mr. Hieu said that Vietnamese goods will still be consumed in the US but certainly at a much lower level.

“ At this point, we cannot predict how much Vietnamese goods may decrease, but from what I see, it is possible that it will decrease by half. A decrease by half will greatly affect Vietnam's GDP ,” the expert said.

Similarly, economist Bui Kien Thanh fears that if the US imposes high tariffs on goods, it will be difficult for Vietnamese goods to be exported to the US because of high tariffs, and American consumers will choose similar goods from other countries with low tariffs. This will greatly affect Vietnam's foreign trade, including reducing the output of Vietnamese goods exported to the US.

Commenting on the reason why the US imposes high tariffs on Vietnamese goods, many experts believe that the US may not only be targeting Vietnam, but also other countries. The reason is that most of Vietnam's exports to the US are products produced by foreign-invested enterprises (FDI) in Vietnam.

“ These companies often export products that are mostly not originally from Vietnam, but import raw materials from other countries and use Vietnamese labor to process and turn them into products for export. There are also some temporarily imported and re-exported items, many of which are from China or have Chinese origin, ” said expert Bui Kien Thanh.

Similarly, Mr. Hieu said that the US is concerned that Vietnam could become a transit station for Chinese goods to avoid high tariffs. Therefore, the US has imposed an equally high tax on Vietnam to prevent this from happening.

Despite the high tariffs, experts still believe that Vietnam will have appropriate response policies. KBSV experts emphasized: " Even in the event that the US puts Vietnam on the list of reciprocal tariffs, we expect the Vietnamese Government to be able to reverse the situation and proactively make more balanced adjustments to the tariff policies between the two countries, thereby creating a basis for negotiations with the US ."

PHAM DUY - THANH LAM

Source: https://vtcnews.vn/viet-nam-co-the-bi-anh-huong-ra-sao-khi-my-ap-thue-46-ar935431.html