While President Trump imposed a base 10% tariff on all goods coming into the U.S., countries with especially high barriers to entry on U.S. goods were slapped with harsher duties.
Vietnam was singled out as a country with particularly egregious tariffs on U.S. products and was slammed with import taxes of 46% that are scheduled to go into effect on April 9. U.S. companies exporting to Vietnam face duties of as much as 90% on their products, including tariffs, value-added taxes, and currency manipulation.
The impact on U.S. apparel stocks like Nike (NYSE:NKE | NKE Price Prediction), which has numerous factories and tens of thousands of employees there, was immediate. NKE stock sank 14% following the tariff announcement yesterday, however the stock rebounded and is now up 2.8% on the day buoyed by a potential tariff relief deal with Vietnam after President Trumps “productive call” with the countries leadership while Apple (NASDAQ:AAPL), which has also transferred a lot of manufacturing out of China to neighboring countries including Vietnam, saw its stock also fall 14% since the tariff announcement.
While surrounding countries are also having tariffs imposed, their rates are much lower, putting Vietnam at a competitive disadvantage. Thailand, for example, will have a 36% tariff, Indonesia, 32%, and Malaysia, 24%.
Most-favored nation
Vietnam exports $119 billion worth of goods to the U.S. each year, its largest market. If that remained unchanged, the tariffs could cost it $55 billion, or more than 10% of the country’s GDP. The U.S. is the country’s largest export market.
Vietnam tried to stave off the reciprocal tariffs by lowering most favored nation import duties on various American products on March 31, but it wasn’t enough. Now the country is asking Trump to postpone the tariffs so the country’s government can negotiate.
The Vietnamese deputy prime minister is visiting the U.S. next week to seek remedies to the trade duties, but the Minister of Industry wants to make a phone call “as soon as possible” with the U.S. Trade Representative. Among the possibilities that could be discussed are an agreement to buy more U.S. goods, easing restrictions on U.S. investors, removing non-tariff barriers, and cutting special consumption taxes. Vietnam’s seafood industry body has called on the government to lower import taxes on U.S. seafood from current levels of 3% to 10% down to 0%.
Trump has said his goal with the tariffs is to level the playing field for U.S. companies so that they don’t operate at a disadvantage.
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