On Friday October 2nd, 2020 the U.S. Trade Representative (USTR) announced that it is initiating an investigation under Section 301 of the 1974 Trade Act addressing two issues with respect to Vietnam-U.S. trade. The USTR will investigate Vietnam’s policies and practices related to:
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The import and use of timber that is allegedly illegally harvested or traded, and
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Acts that may contribute to the undervaluation of its currency.
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Both matters could harm U.S. commerce, the agency said. Section 301 has been used to place enormous new duties on nearly $400 billion in Chinese products coming into the United States. It is the subject of thousands of lawsuits at the U.S. Court of International Trade alleging that the statute has been improperly applied by this same federal agency.
Friday’s announcement quoted Trade Representative Robert E. Lighthizer as saying “Using illegal timber in wood products exported to the U.S. market harms the environment and is unfair to U.S. workers and businesses who follow the rules by using legally harvested timber. In addition, unfair currency practices can harm U.S. workers and businesses that compete with Vietnamese products that may be artificially lower-priced because of currency undervaluation.”
Numerous U.S. firms have moved production in whole or in part from China to Vietnam over the past several years, largely to escape the very duties now potentially looming. Just about everything from cell phones (Foxconn) to clothing (Gap), footwear (Nike) is now made in Vietnam. Furniture, solar panels, auto parts, fabrics, stoneware, countertops, tires, etc. are all sold from it into the U.S. market. Vietnam has a population of 96 million and was described by Forbes magazine as “the big winner” in the U.S. – China trade war. Maybe not for long. If the U.S. response to successful manufacturing in China is any indication, now might be a good time for wider diversification of sourcing for those U.S. entities which made the move to Vietnam.