Good morning from Ho Chi Minh City, and welcome to the latest edition of the Vietnam Weekly. To new readers: everyone gets the same opening section of the newsletter, but only paying subscribers get access to the whole thing.
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Tariffs, Once Again
Last Friday, the Trump administration’s 10% tariff on many Vietnamese exports expired and was immediately replaced by a 12.5% rate based on a forced labor investigation against 60 countries.
This mainly impacts the apparel, footwear, seafood, and agriculture sectors, while most high-tech products are exempt across the covered economies.
It’s difficult to keep track of the various tariff rates and trade investigations coming out of Washington, D.C., but Vietnam continues to be a major target.
As Kimmi Võ notes in Mekong Brief, 37 other countries got the 12.5% rate, while several of Vietnam’s competitors in the above-mentioned industries were given a 10% rate, namely India, Indonesia, Cambodia, Bangladesh, Malaysia, Pakistan, and Sri Lanka.
The lower rate is for countries that have “adopted, committed to, or partly operate a ban on forced-labor imports,” to quote Kimmi.
On July 22, the Vietnamese government issued a decree banning the import of goods produced through forced labor, but it doesn’t go into effect until September 5.
The Ministry of Foreign Affairs responded to the new tariff by stating that it “ does not fully reflect the reality and Vietnam's efforts to prevent, reduce, and eliminate forced labor, including the prohibition on imports of products made with forced labor.”
Meanwhile, Bloomberg reported this week that U.S. customs officials inspected Chinese-owned factories in northern Vietnam, an exceptionally rare move. Potential transshipment is a major American concern, especially given the influx of Chinese manufacturing investment here since Trump kicked off his trade war with the world’s largest exporter.
In addition to the global forced labor investigation, intellectual property is another focus of the U.S., as covered here before. According to VnExpress, market management authorities in HCMC recently discovered a company producing around 50,000 fake Nike shoes for export to the U.S.
This was based on intelligence shared by American agencies.
It’s clear that Vietnam should expect little relief from U.S. trade pressure, as the Trump administration continues to find new avenues to exploit.
Unrelated to trade, the USS George Washington aircraft carrier arrived in Đà Nẵng for a multi-day visit yesterday. This is the fourth such port of call by a U.S. Navy carrier since 2018.
The rest of today’s edition, for paid subscribers:
- Long Thành in the news again - for the wrong reason. Inspectors find US$121 million in illegal subcontracting, with 31 people already indicted in a separate case.
- Data Corner: PNJ has spent US$265 million buying back gold and diamonds, while Bamboo Airways is down to three planes.
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