HANOI: In a strategic move to mitigate the impact of recently imposed tariffs by the United States, Vietnam has agreed to commence negotiations on a reciprocal trade agreement with Washington. This decision comes shortly after President Donald Trump suspended a steep 46 percent duty on Vietnamese imports, allowing Hanoi to seek a more stable economic relationship with its largest export market.

Vietnam's Deputy Prime Minister Ho Duc Phoc, who has been designated to lead the trade discussions, voiced optimism about the potential for an agreement that could ease tariff burdens. "We should soon negotiate a bilateral trade agreement to promote stable and mutually beneficial economic and trade relations," he stated, as reported on the government's official portal.

To appease US concerns, Vietnam is preparing to take decisive action against the misuse of its territory for the transshipment of Chinese goods disguised as "Made in Vietnam" products, which typically enjoy lower import duties. This move aligns with the US Administration's scrutiny over alleged trade fraud, notably highlighted by influential trade advisor Peter Navarro.

Vietnam's government noted that it had previously held emergency meetings to address US concerns regarding intellectual property theft and illicit trade practices and is now under pressure to establish firm control over exports, particularly those involving sensitive technologies such as dual-use items like semiconductors and advanced chips.

Despite the harsh tariffs, which have been temporarily suspended for 90 days, Vietnam hopes to negotiate these rates down to a more manageable range of 22% to 28%. Official trade data indicated that Vietnam's export growth has largely been fueled by inputs from China, prompting the government to deduce a crackdown is imperative to maintain its advantageous trading relationship with the United States.

Trade experts highlight the delicate balance Vietnam must maintain as it aims to sustain favorable trade ties with the US while avoiding tensions with China, its top source of foreign investment and a neighbor embroiled in territorial disputes with Vietnam over the South China Sea. "Vietnam's approach will require careful navigation between these two powers," said a trade analyst familiar with the ongoing discussions.

The new proposals also include a crackdown on "illicit transshipment," which involves rerouting goods from countries facing tariffs to Vietnam—a practice that has reportedly attracted US scrutiny. As a precaution against exacerbating tensions with China, Hanoi is contemplating stricter measures while maintaining its economic ties.

In addition to tightening controls on trade, Vietnam is proactively engaging with US firms to bolster its aviation sector. Vietnamese airline Vietjet recently secured a $300 million agreement with US-based AV AirFinance for aircraft financing, showcasing Vietnam’s focused efforts on diversifying partnerships in areas beyond regional dynamics.

Formerly reliant on Chinese goods, the nation is witnessing an influx of multinational corporations implementing a "China plus one" strategy, which involves establishing operations in Vietnam to mitigate risks associated with trade with China.

The changes in Vietnam's trade policy come at a time when it prepares to welcome Chinese leader Xi Jinping, potentially complicating its diplomatic stance within a heated global trade environment. The approval of COMAC aircraft from China is also anticipated shortly, reflecting the ongoing bilateral relationship between the two countries.

As Vietnam embraces its position in the international trade arena, it remains to be seen how these developments will shape its long-term economic strategies in light of the shifting political climate.

For further details, refer to the original articles from Channel News Asia, Reuters, South China Morning Post, and Bangkok Post.