Next Trade War? U.S. Fires Salvo at Vietnam

The brewing trade fight with Vietnam is breaking across familiar lines in the U.S., with importers aghast and textile interests applauding.

Late last week, with President Trump suffering from COVID-19, his administration moved ahead with an investigation into Vietnam’s practices in the timber industry and whether or not the Asian nation undervalues its currency, giving domestic producers an advantage.

“President Trump is firmly committed to combating unfair trade practices that harm America’s workers, businesses, farmers, and ranchers,” said Robert Lighthizer, United States Trade Representative.

The stakes are high for fashion.

Vietnam accounts for 15.8 percent of apparel imports to the U.S., making it the second-largest producer behind China, which has a 37.3 percent share of the market.

And Vietnam has been something of a port in the storm for apparel producers contending with Trump’s long-running trade war with China, which has calmed but still simmers below the surface.

“Vietnam is an important trading partner for the U.S. apparel, footwear, and travel goods industry, and has become even more important as U.S. companies have implemented diversification strategies away from China,” said Steve Lamar, president and chief executive officer of the American Apparel & Footwear Association. “As brands did their best to restructure their sourcing models to protect American consumers and American global value chain workers from increased costs caused by the administration’s tariffs, and follow the administration’s edict to diversify from China, many turned to their trusted partners in Vietnam.”

Lamar also argued that new costs on U.S. supply chains would come just as the industry is recovering from the coronavirus slowdown.

But the National Council of Textile Organizations welcomed the move.

“NCTO strongly opposes foreign governments undervaluing their currencies, which puts U.S. manufacturers at a disadvantage by inflating the cost of U.S. exports and deflating the cost of U.S. imports,” said Kim Glas, president and ceo of the textile group.

“The U.S.-Vietnam trading relationship suffers from many of the same problems that we have experienced with China,” Glas said. “There are strong indications of a purposefully undervalued currency that warrants a full investigation. Further, the industries in the two countries are inextricably linked, as Vietnam sources much of its textile inputs from China.”

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