Việt Nam Trade Office warns of trade diversion, affecting Vietnamese exports to EU

Việt Nam Trade Office warns of trade diversion, affecting Vietnamese exports to EU

Being cautious and proactive at this time will help Việt Nam protect its exports to the EU and preserve the international reputation of Vietnamese goods amid an increasingly volatile global trade landscape.

Workers check products at a Hoa Sen Group warehouse. — Photo courtesy of Hoa Sen Group

The European Union is concerned that Chinese goods, previously destined for the US, could be redirected to the European market due to the reciprocal tariffs, said Nguyễn Thị Hoàng Thúy, head of the Việt Nam Trade Office in Sweden, concurrently in charge of the Nordic market.

The EU is closely monitoring several product categories from China, including steel, electronics, solar panels and wind turbines.

Thúy said: "EU officials have indicated that one side effect of the high tariffs imposed by the US is a surplus of Chinese production.

"This means that goods that used to be exported to the US may now be redirected to Europe. A senior EU official said: 'We may see trade diversion, as countries unable to export to the US look for alternative markets. The EU will be ready to defend its market'."

In light of the EU’s tightened monitoring to prevent the influx of such goods, Thúy warned that Vietnamese exporters dealing in similar product lines should be wary of the risk of Chinese goods ‘masking their origin’ via Việt Nam. She highlighted that this risk is now more tangible than ever.

"If it happens, the reputation of 'Made in Việt Nam' goods will suffer severe damage. Moreover, the EU may respond by intensifying inspections, tightening preferential conditions or even imposing punitive tariffs on Vietnamese products,” she added.

To minimise risks, experts have recommended that Vietnamese businesses strictly manage their supply chains and ensure clear traceability of origin to avoid being implicated in trade fraud. 

Businesses should also proactively ensure transparency in origin documentation, be well-prepared with supporting materials in case of inspection and closely monitor EU trade policy developments to adjust their export strategies promptly. 

Importantly, businesses should enhance their competitiveness by focusing on product quality and real value-added elements to maintain a strong foothold in the European market.

Being cautious and proactive at this time will help Việt Nam protect its exports to the EU and preserve its international reputation of goods amid an increasingly volatile global trade landscape.

The EU faced a similar situation in the steel industry in 2017, when the US closed its market to Chinese steel, resulting in a surge of such goods into the EU.

At that time, the EU applied safeguard measures permitted by the WTO to restrict imports of certain products in response to the sudden market glut. 

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