As US hikes China tariffs , imports hiked from China reliant Vietnam
- May 17, 2024
- Posted by: OptimizeIAS Team
- Category: DPN Topics
No Comments
As US hikes China tariffs , imports hiked from China reliant Vietnam
Sub: Economy
Sec: External sector
Context:
- As the United States intensifies efforts to reduce trade with China by hiking tariffs, it has greatly boosted imports from Vietnam.
More on news:
- The surge in the China-Vietnam-U.S. trade has vastly widened trade imbalances, with the Southeast Asian country.
- Vietnam now has the fourth-highest trade surplus with the United States, lower only than China, Mexico and the European Union.
- At over $114 billion last year, U.S. imports of goods from Vietnam were more than twice as big as in 2018 when the Sino-American trade war began.
- The European Commission (EC) in October last year launched an anti-subsidy investigation into the imports of battery electric vehicles (BEV) from China.
Tariffs imposed by US on China:
- The tariffs imposed by the US on ship-to-shore cranes will rise to 25 per cent from zero, those on syringes and needles will rise to 50 per cent from nothing now and some personal protective equipment (PPE) used in medical facilities will rise to 25 per cent from as little as 0 per cent now.
- More tariffs will follow in 2025 and 2026 on semiconductors, as well as lithium-ion batteries that are not used in electric vehicles, graphite and permanent magnets as well as rubber medical and surgical gloves.
Vietnam exports to U.S.:
- Vietnam now has the fourth-highest trade surplus with the United States, lower only than China, Mexico and the European Union.
- Vietnam’s export boom has been fuelled by imports from neighboring China, with inflows from China almost exactly matching the value and swings of exports to the United States in recent years.
- The surge in Chinese imports in Vietnam coinciding with the increase in Vietnamese exports to the U.S. may be seen by the U.S. as Chinese firms using Vietnam to skirt the additional tariffs imposed on their goods
- The growing trade imbalance comes as Vietnam seeks to obtain market economy status in Washington.
- In key industries such as textiles and electric equipment, Vietnam captured more than 60% of China’s loss.
- One-third of Vietnam’s imports come from China, mostly electronics and components.
Symbiotic Relationship:
- The symbiotic relationship is reflected in latest data: In the first quarter of this year, U.S. imports from Vietnam amounted to $29 billion, while Vietnam’s imports from China totalled $30.5 billion, mirroring similarly corresponding flows in past quarters and years.
How will it negatively impact India?
- Indian exporters feared that the loss of a major market for China could trigger dumping of Chinese products into India.
- China accounts for over half of the global EV sales, largely driven by its near dominance in battery production which is a critical element for EV manufacturing.
- In 2023, China’s production of lithium-ion batteries was equivalent to the global demand that stood at 2,600 GWh.
- Indian exporters feared that the recent US move will start a tariff war between two major economic powers as a retaliation is soon expected from China.
- A threat of dumping also comes as the European Union is expected to announce similar barriers citing possible injury from Chinese imports.
Opportunities for India:
- The US-China tariff war could also open up opportunities for the Indian players.
- It provides an opportunity for India and other competitors to chip in the supply gap.
- India has opportunities in facemasks, Personal Protective Equipment Kit (PPE), syringes & needles, medical gloves, aluminum and iron & steel.
- Opportunity may come in China also with retaliation on US exports.
What is Dumping?
- Dumping is a term used in the context of international trade.
- Dumping occurs when a country or company exports a product at a price that is lower in the foreign importing market than the price in the exporter’s domestic market.
- Dumping is legal under World Trade Organization (WTO) rules unless the foreign country can reliably show the negative effects the exporting firm has caused its domestic producers.
What is Anti Dumping Duty?
- Anti-dumping duties are taxes imposed on imported goods in order to compensate for the difference between their export price and their normal value, if dumping causes injury to producers of competing products in the importing country.