Global trade war and Vietnam's response

Countries have reacted in a negative way to the US Government about this - of course. However, what surprised many people was the quick and unexpected reaction of the General Secretary of the Communist Party of Vietnam To Lam when, on behalf of the Vietnamese State, he proposed "bringing the tax rate to 0%".on the phonewhich the US President himself said was “very useful”. A bold move, was it a bit hasty or was Vietnam very confident? Everything has its roots.

First, let's briefly talk about the benefits if the import tax rate is 0%:One,increase competitiveness. If the US reduces tariffs to 0%, Vietnamese goods can compete better than rivals such as China, Mexico, and India.Two,help Vietnamese businesses access the US market more easily, increasing export turnover.Three,Investment attraction issue: Foreign enterprises can invest heavily in Vietnam to take advantage of tax incentives.Four,boost domestic economy: Increased exports can lead to growth in production, employment and income for workers.

However, there will be risks and negative impacts:One,pressure on domestic production. If the bilateral tax is 0%, US goods entering Vietnam will not be taxed, which could put great pressure on the agricultural sector and some domestic production industries. Beef, pork, milk, corn, soybeans and pharmaceutical products will face difficulties. The same goes for the automobile manufacturing and assembly industries...Two,risk of trade imbalance. If we do not control it well, it can lead to trade deficit, affecting domestic production.Three,Risk of dependence on the US market. If Vietnamese enterprises are too dependent on exports to the US, they may be at risk when the US changes its policies or imposes technical barriers.

The first thing to do is to have an exchange between the top leaders of the two countries. We have been and are sending high-level delegations of the Government and ministries and branches to the US for negotiations, and we have done so in a timely manner with a spirit of openness, cooperation, and respect for bilateral interests (what the US President cares about most). The results of the upcoming negotiations certainly cannot be based solely on "negotiation" skills, because when "declaring war" on countries over tax policies this time, Mr. Donald Trump has made careful preparations.

I think, in addition to a deep understanding of the trade situation between the two countries, understanding and grasping the exact intentions of our partners this time, along with being astute in our exchanges, we will certainly also show our sharing and goodwill with them... so that the results are most beneficial for Vietnam. Domestically, I think, this is a situation for us to be more determined to strongly implement solutions to improve and enhance the production capacity of domestic enterprises, and enhance the competitiveness of products, goods and services.

This strong transformation not only requires businesses but also requires the synchronization, parallelism, and real companionship of state agencies, mechanisms, and policies for businesses, especially for private businesses. In addition, another way to accompany businesses that is quite effective without fear of violating international law or violating agreements is to promote the movement "Vietnamese people prioritize using Vietnamese goods" among the people - a solution that many developed countries today have also used in the early days of developing their businesses. Regarding foreign affairs in the economic and trade fields: This is the time for us to exploit and maximize the signed FTAs ​​in a specific and practical way. The strength brought by these FTAs ​​is seen first of all in the diversity, the initiative in relations, avoiding too much dependence on one market and promoting Vietnam's strengths in these markets. We also need to behave in a balanced and harmonious manner with major partners, strengthening and promoting increasing trust with them.

The current context and conditions of Vietnam are much different from before. Vietnam's role and position have been greatly enhanced not only politically but also economically, we also know how to exploit our position in the geopolitical picture quite well. Even with the US, the two countries have just upgraded to a Comprehensive Strategic Partnership. Following the times the Vietnamese State has handled situations in recent global and regional economic crises and recessions, as well as the flexibility and effectiveness of its diplomatic policy, we believe that the country will overcome the difficult times ahead that the US tax policy brings to steadily develop and move forward.