Reciprocal tax rate: Both sides still have room for discussion and negotiation

Mr. Ta Hoang Linh - Director of Foreign Market Development Department - Ministry of Industry and Trade

The export and foreign trade structures of the two countries do not compete directly.

Mr. Ta Hoang Linh said that the Ministry of Industry and Trade regrets that the United States announced a 46% tax on all Vietnamese export goods, effective from April 9.

Vietnam and the United States are two complementary economies. The export and foreign trade structures of the two countries do not compete directly but complement each other, in accordance with the internal needs of each country. Vietnamese goods exported to the United States mainly compete with third countries, not directly with US enterprises in the US market. On the contrary, Vietnamese goods exported to the United States also create conditions for US consumers to use cheap goods.

The average MFN tariff that Vietnam currently imposes on imported goods is 9.4%. Therefore, the reciprocal tariff that the United States plans to impose on Vietnamese goods of up to 46% is unscientific and truly unfair, and does not reflect Vietnam's goodwill and efforts over the past time in dealing with the trade deficit between the two countries.

In recent times, the Government and ministries have resolved a series of difficulties and obstacles for US businesses in Vietnam, issuing a Decree to reduce MFN tariffs, in which 13 groups of advantageous US products benefited. In addition, many US projects in Vietnam have received attention, resolved and removed difficulties and obstacles.

According to the White House announcement, the reciprocal tariffs that the United States imposes on its trading partners are aimed at correcting global trade injustices, bringing manufacturing back to the country, strengthening national security, and promoting economic growth.

It is understood that the tariffs will remain in place until the United States determines that the threats posed by trade deficits and unfair trade practices are addressed, corrected or mitigated.

Therefore, the Ministry of Industry and Trade believes that there is still room for discussion and negotiation between the two sides to reach a mutually beneficial result.

“This morning, right after the US announced the imposition of tariffs, Minister of Industry and Trade Nguyen Hong Dien sent a diplomatic note requesting the US side to postpone the decision to impose tariffs to take time to discuss and find a reasonable solution for both sides. We are arranging a phone call between the two Ministers as well as at the technical level with colleagues at the US Trade Representative (USTR) as soon as possible,” Mr. Linh added.

Need to make the most of 17 FTAs

Assessing the impacts on Vietnam's export growth target in 2025 and solutions and recommendations for Vietnamese enterprises, Mr. Ta Hoang Linh said that in 2025, the Ministry of Industry and Trade set an export growth target of about 12%, equivalent to about 450 billion USD. This target was set in the context of global economic recovery and Vietnam taking advantage of signed free trade agreements.

In case Vietnam and the United States cannot find a positive solution, this tax imposition will have a certain negative impact on the export growth target.

However, this is also an issue that the Ministry of Industry and Trade has predicted and prepared for. The Ministry of Industry and Trade has also proposed a specific Action Plan to the Government and advised businesses to take necessary steps when the problem occurs.

The Ministry of Industry and Trade forecasts that in the coming time, our export activities will face many difficulties, therefore, close coordination between ministries, sectors and enterprises is needed to effectively implement the proposed solutions to achieve the export growth target in 2025.

Export enterprises need to take advantage of existing strengths such as 17 free trade agreements with over 60 countries and territories and 70 bilateral cooperation mechanisms.

At the same time, businesses also need to promote the diversification of export markets. The US market accounts for 13% of global imports, but Vietnam's exports to the US account for 30% of Vietnam's total export turnover. This is both an advantage and a weakness of export activities. Vietnam still has many opportunities to exploit the remaining 87% of the world's market. The Ministry of Industry and Trade will continue to make efforts to open up export routes to new markets with much room.

On the side of the Ministry of Industry and Trade, in the coming time, the Ministry of Industry and Trade will continue to promote negotiations of FTAs ​​with new markets in the Middle East, Latin America, Central Asia and other emerging markets.

In addition, trade promotion and logistics infrastructure improvement should be strengthened to reduce transportation costs and enhance the competitiveness of Vietnamese goods.

In the long term, Vietnam will also have to restructure its economy, diversify markets, diversify products, and diversify supply chains to ensure rapid and sustainable development. Because a sustainable export industry cannot rely solely on processing, but must also rely on science, technology, and innovation to make the economy more resilient and minimize negative impacts from external shocks.

Need to be proactive to minimize risks from international trade fluctuations

Mr. Ta Hoang Linh also said that to minimize risks from international trade fluctuations, the Ministry of Industry and Trade recommends that domestic enterprises first diversify export markets, effectively exploit key markets, traditional markets, as well as develop small markets, niche markets and open up new potential markets.

Second, improve product quality, ensure products meet technical, labor and environmental standards of export markets, to increase competitiveness and reduce the risk of being subject to trade defense measures.

Third, control the origin of raw materials: Focus on controlling the origin of raw materials for production, ensuring compliance with the rules of origin in the FTA and avoiding risks related to trade fraud.

Fourth, strengthening trade defense capacity. Enterprises improve their awareness and ability to respond to foreign trade defense measures through updating information and participating in relevant training courses.

Fifth, proactively monitor and update information on markets and trade policies of countries to promptly adjust appropriate business strategies.

The synchronous implementation of the above solutions will help Vietnamese enterprises increase their resilience to fluctuations in international trade and maintain sustainable export growth.

Source: https://thoibaonganhang.vn/muc-thue-doi-ung-hai-ben-con-khong-gian-de-trao-doi-dam-phan-162238.html