The United States has announced the imposition of a preliminary anti-subsidy tariff on car and truck tires from Vietnam, a week after Secretary of State Mike Pompeo visited Hanoi seeking help in confronting security threats posed by China.
According to a statement from the U.S. Department of Commerce on November 5, Vietnam’s “undervalued currency” was among the reasons for the imposition of tariffs, which will range from 6.2 to 10.1 percent. The U.S. Treasury Department concluded in August that Vietnam had manipulated its currency in at least one case involving the export of light vehicle tires. U.S. imports of passenger tires from Vietnam were valued at about $469.6 million in 2019, the Commerce Department said.
This is the first time that department has based a countervailing duty on the value of a foreign currency. “Today’s preliminary determination represents an important step forward for the America First trade agenda,” U.S. Secretary of Commerce Wilbur Ross said in the statement. He added that the Trump Administration “will continue addressing this issue to ensure American industry competes on a level playing field.” The commerce department is scheduled to announce its final determination in this case on or before March 16, 2021.
The tariff follows the Trump administration’s October 2 announcement of an investigation into whether Vietnam has been artificially suppressing the value of the dong. According to a statement from the office of the U.S. Trade Representative, Washington will “investigate Vietnam’s acts, policies, and practices that may contribute to the undervaluation of its currency and the resultant harm caused to U.S. commerce.” A separate probe is also looking into the country’s import and use of illegally traded timber.
In a meeting in Hanoi last month with Adam Boehler, the head of the U.S. International Development Finance Corporation, Prime Minister Nguyen Xuan Phuc denied manipulating the Vietnamese currency. “If the dong is devalued, it will seriously hurt the economy,” Phuc said, asking that President Donald Trump come to “a more objective assessment of the reality in Vietnam.” When asked about the tariffs said during a press briefing in Hanoi, Foreign Ministry spokesperson Duong Hoai Nam said that the government was “closely monitoring the situation.”
The Trump administration has also recently revoked duty-free privileges on more than $2 billion worth of Thailand’s exports to the U.S., due to a lack of progress in opening the country to American pork imports containing the animal feed additive ractopamine.
The announcement comes a week after Secretary of State Mike Pompeo visited Hanoi on the final stop on a five-nation Asian tour designed to stiffen the region’s willingness to push back against Chinese advances in the region. “We have enormous respect for the Vietnamese people and your country’s sovereignty,” Pompeo told Prime Minister Phuc during their meeting in Hanoi. “We look forward to continuing to work together to build on our relationship and to make the region — throughout Southeast Asia, Asia and the Indo-Pacific — safe and peaceful and prosperous.”
While minor, the trade disputes won’t help relations between Hanoi and Washington, who have been pushed together by common concerns about Chinese ambitions in the region, particularly in the South China Sea. On display once again is the contradiction between Trump’s America First trade policy and his administration’s attempt to rally Southeast Asian partners around an anti-China posture: a mirror of the broader incongruities in Washington’s current policy toward the Indo-Pacific.