US may impose duties on imports of tires from Vietnam

The US trade mission has launched an investigation into Vietnam in connection with practices that could lead to an undervaluation of the Vietnamese dong and damage US trade, according to a press release from the department. "Dishonest foreign exchange practices can harm American workers and businesses competing with Vietnamese goods that could be artificially undervalued by undervaluation of the currency," said US Trade Representative Robert Lighthizer. In addition, the sales office is conducting an audit in connection with the import or use of illegally cut timber from Vietnam.

As noted by The Wall Street Journal, the department refers to section 301 of the US trade law of 1974, which previously allowed the Donald Trump administration to impose duties on the import of Chinese goods worth $ 370 billion a year.

Investigations into timber imports will be limited as the industry is not of great importance to Vietnam, but foreign exchange scrutiny could affect many Vietnamese goods imported into the US, the newspaper said.

The Vietnam Trade Mission to the United States did not respond to a request.

Imports from Vietnam to the United States in 10 years have grown from $14.9 billion to $66.6 billion in 2019, according to data from the US Department of Commerce. Vietnam became popular with manufacturers looking to leave China in order to avoid US duties or lower labor costs.

Before imposing duties, the US authorities should conduct an investigation and public hearings, as well as prepare a report, the WSJ notes. In the case of China, it took six months to prepare the report, after which it took another three months before the duties entered into force. Therefore, most likely, the decision on the possible introduction of duties against Vietnam will be made after the presidential elections in the United States.

In August, the US Treasury Department concluded that Vietnam was manipulating the national currency, as a result of which its real value against the US dollar was undervalued by 4.7% in 2019. This conclusion was made in the framework of a case initiated by American tire manufacturers. The Finance Ministry's assessment may lead to the introduction of duties, but only on the import of car tires from Vietnam.

Vietnamese Commerce Minister Tran Tuan An earlier denied accusations of dong undervaluation. In a letter to the trade litigation, he noted that Vietnam is adopting normal monetary policy measures that "are not aimed at creating a competitive advantage for exports."