Viet Nam is on track to overtake Canada as a source of U.S. imports

While U.S. tariffs have hammered Canada’s export sector, Viet Nam has emerged a surprising winner in the trade dispute, despite facing an effective tariff rate four times higher than that of Canada.

In fact, if the current trajectory of U.S. imports holds, Viet Nam could surpass Canada as a share of U.S. imports, highlighting the fraying trade links between Canada and the United States.

The gap in U.S. import share between Canada and Viet Nam was already closing before Mr. Trump returned to office, but the trend has accelerated as the U.S. ramped up its pressure on China. Under the Trump 1.0 and Biden administrations, the U.S. sought to lessen its reliance on China for low-cost imports through the use of tariffs and other trade restrictions.

As such, manufacturers shifted a lot of production to Viet Nam instead. Last year, Viet Nam’s exports to the U.S. soared 42 per cent to US$195-billion, while U.S.-bound shipments from Canada declined 7 per cent to US$382-billion.

But Viet Nam has also ingratiated itself with Mr. Trump, becoming one of the first countries to sign a trade deal with the U.S. last year. Earlier this month To Lam, the head of the Communist Party of Viet Nam, attended Mr. Trump’s inaugural “Board of Peace” meeting, which most Western democracies, including Canada, steered clear of.

There is still tension between the U.S. and Viet Nam over the issue of transshipped goods from China making their way to the States. But the country’s approach appears to be working. This week Mr. Trump removed Viet Nam from a list of countries barred from accessing advanced U.S. technology.

Source: The Globe And Mail