Impact of Trump’s election on Vietnam’s economy overblown: expert
Impact of Trump’s election on Vietnam’s economy overblown: expert
Countries worldwide, including Vietnam, are voicing concerns over the potential economic impacts of Donald Trump’s election on their economies but these risks may be overstated, according to Michael Kokalari, director of macroeconomic analysis and market research at VinaCapital, a Vietnam-based investment and asset management firm.
U.S. consumers prefer Vietnamese products. Photo: Quang Dinh / Tuoi Tre |
With the U.S. presidential election now complete, all eyes have turned to what the new Trump administration will actually do once he takes office in January 2025.
Kokalari claimed that the U.S. campaign was rife with outlandish statements and hyperbolic media reporting, leaving many voters feeling that the coverage was more campaign-driven than fair and objective.
“We see no risk that Trump’s election will derail Vietnam’s healthy economic trajectory,” the VinaCapital expert added.
Trump said if elected, he would impose 60-percent tariffs on imports from China and slap a 20-30-percent tax rate on other countries.
That is considered part of his campaign to gain support from working-class voters. However, VinaCapital believes this is primarily a negotiation tactic, and the likelihood of actually implementing these high tariffs is very low.
Trump now has several accomplished advisors on economic issues who are likely to have greater influence on him than those from his first administration.
These advisors fully understand the negative impact that excessively harsh tariffs on imports could have on the U.S. economy.
Those negative consequences include preventing re-shoring manufacturing jobs to the U.S. because draconian tariffs would push up the value of the greenback.
Trump considers China as the focus, not Vietnam, Kokalari stated, stressing that the U.S. government shows an enthusiastics economic brace of Vietnam at the highest level.
VinaCapital is not aware of any significant reservations from American consumers to purchase made-in-Vietnam products, Kokalari said.
Vietnam may be viewed as helpful in weening the U.S. off of low-end China-made goods because high wages and low availability of qualified factory workers will likely limit U.S. efforts to re-shore manufacturing jobs to only high value-added products.
Vietnam can produce goods that appeal to U.S. consumers -- items that are too costly to manufacture in the U.S. but that Trump would rather they did not source from China.
According to Tran Nhu Tung, vice-chairman of the Vietnam Textile and Apparel Association, the local textile and garment sector will benefit if the U.S. increases tariffs on shipments from China.
Vietnamese enterprises should focus on ESG (Environmental, Social, and Governance) policies and traceability, Tung added.
Vietnam has a massive trade surplus with the U.S., estimated at US$100 billion last year, making it the country with the third-largest trade imbalance with the U.S., after China and Mexico.
At some point, this numerical imbalance will become an issue for the Trump administration.
Lawyer Tran Anh Duc from the Ho Chi Minh City Bar Association said Vietnam’s trade surplus with the U.S. is high and may increase further in the coming time.
Vietnam is favorably positioned to reap the benefit of the global trade diversion and the supply chain alterations.
Welcoming new investment flows is in the interest of Vietnam and will help the Southeast Asian nation climb the value-added ladder across various industries and sectors, said HSBC expert Joon Suk Park.
On Sunday, U.S. media all called the presidential election, which took place on November 5, for Republican Trump, predicting he will win 312 electoral votes compared to Democrat Kamala Harris' 226.
Harris later acknowledged President-elect Donald Trump's win.
She said she had called Trump, congratulated him on his triumph in last Tuesday's presidential election and promised to engage in a peaceful transfer of power, Reuters reported.
