How the US election result can impact Vietnam's exports
The 2024 US presidential election is poised to exert a critical influence not only on domestic policies but also on America’s international relationships, particularly with strategic partners like Vietnam. As the largest export market for Vietnam and a crucial ally in the Indo-Pacific region, the United States holds a pivotal role in shaping bilateral trade, investment, and cooperation agendas.
The election outcome will profoundly impact these dynamics, determining future policies on tariffs, trade agreements, and broader economic initiatives between the two nations. Stakeholders and businesses on both sides are closely watching how candidates’ foreign policy platforms will shape the future of US-Vietnam relations and their implications for global economic landscapes.
During the election campaign, both the Republican and Democratic presidential candidates announced their intentions to rise import taxes, although the tax increase policies are different between the two candidates.
Trump was more aggressive when he initially proposed a 10 per cent tax on all imported goods from any country, recently raising it to 20 per cent.
Meanwhile, Harris believes that Trump's general 10 per cent tax on all imported goods is a direct tax that costs Americans more in spending.
She proposes using tax credits to subsidise domestic businesses to develop industries such as clean energy, semiconductors, solar panels and electric vehicles, which is like an indirect tax.
The difference between Trump and Harris is only in degree and scale. Trump uses taxes as a wall to protect domestic production, while Harris is also building a fence, although it is thinner, but it also has the task of protecting American businesses.
Overall, the views of the Democratic and Republican parties on trade policy with China have become quite similar.
Therefore, these policies are unlikely to change regardless of the outcome of the US presidential election this month.
What Vietnamese businesses should do?
From another perspective, the Thời báo Kinh tế Sài gòn (Sài Gòn Economic Times) quoted expert Michael Kokalari, a chartered financial analyst and chief economist at VinaCapital, said that if elected, Trump was expected to focus on reducing the value of the dollar instead of raising taxes.
A weaker dollar would boost Việt Nam's exports to countries outside the US, and imposing a 10-20 per cent tariff on imports from countries other than China would not reduce Việt Nam's competitiveness, he said.
In addition, if the US imposes a 60 per cent tariff on China, Việt Nam and Mexico will once again benefit the most in terms of exports, according to a report by Standard Chartered and others.
In a report released by Vinacapital in early September this year, Michael Kokalari commented that Việt Nam was one of the three countries in the world with the closest economic ties to the US, after Canada and Mexico.
Strong US consumption is driving the recovery of Việt Nam's exports, manufacturing and GDP growth.
