Sharp, the Japanese electronics giant, has announced plans to build a manufacturing site here in Vietnam according to Nikkei Asia here. This is the latest news in the continuing trade war between the United States and China, and provides an opportunity to examine the impacts of the trade war on a country like Vietnam.
Much has been written about the benefits brought to the country by the trade war, particularly the increase in manufacturing as international producers switch their sites from tariffed China to other countries. Vietnam has been at the forefront of this migration because of its proximity to China and its ability to share in many of the same supply chains that fuel manufacturing in China.
That said, there is still much to be considered.
According to Dan Harris of Chinalawblog.com the conflict between China and the United States is the New Normal. This is troubling in some ways because it is a threat to a geopolitical balance in the Pacific, one that has been timorously growing for several decades since the end of the Cold War and which is now on the way to complete decoupling. For Vietnam, which shares a border with China, a volatile China is a danger. Not just militarily–as the country has invaded Vietnam before–but economically.
I say this because China is one of the largest investors in Vietnam, and while that may prove beneficial for Vietnam now, there are other possibilities. Trump himself has called Vietnam the “worst abuser” and threatened tariffs. If Vietnam because the drainage ditch for Chinese manufacturing there is the threat that Vietnam will be as equally on the hook to the Trump administration as China, and that means tariffs imposed on Vietnamese goods simply because they involve Chinese supply chains.
That threat, which is small yet, is still looming. The United States has never been shy about the fact that it likes to lump Vietnam and China together as a communist bloc. They didn’t even hide the fact that they considered Vietnam to be essentially China when they classified Vietnam as a non-capitalist economy for anti-dumping purposes several years ago. They simply said, because Vietnam is like China, they aren’t capitalist. Not only is that offensive racially, but it’s untrue economically as well.
While Vietnam has a socialist history, see Ho Chi Minh, there is also a long history of economic reform. Vietnam did not suffer the same political consequences that China did under Mao, and Vietnam has been keen on the dollar economy for decades. Yes, the Vietnamese Party is also very concerned with maintaining power, but the liberalization of the Vietnamese economy has been mostly for the good, and has done a lot to invite capital into the country, capital which acts as a liberalizing cycle.
But despite the differences, the United States views Vietnam as largely China, and that’s a threat. One that is definitely concerning in light of the increased tariffs against China, and Trump’s obviously antagonistic stance against Vietnam.