In light of the significant changes in U.S. import tax policy, particularly President Donald Trump's announcement of a 25% tax on all cars not produced in the U.S., Vietnam is considering adjusting import taxes on certain goods from the U.S. to reduce the risk of retaliatory measures being applied.
U.S. tightens tax policy
On March 26, President Trump announced a 25% import tax on all types of cars not produced in the U.S., a tax rate ten times higher than before. This policy is expected to take effect on April 2, aiming to encourage domestic production and reduce dependence on imported goods. However, this decision has caused a wave of concern globally, especially among America's major trading partners such as Mexico, Japan, South Korea, Canada, and Germany.
The U.S. tightening of tariffs not only affects the automotive industry but also puts significant pressure on countries with close trade relations with the U.S., including Vietnam. In response, Vietnam is considering adjusting import taxes on some U.S. goods to limit the risk of facing retaliatory tariffs or other unfavorable trade measures.
Vietnam is flexible in tax policy to protect economic interests
According to Mr. Nguyen Quoc Hung, Director of the Tax Policy Management and Supervision Department (Ministry of Finance), Vietnam may cut import taxes on certain products from the U.S., including cars and agricultural products. This is one of the measures to help Vietnam flexibly respond to the global trade situation while ensuring domestic economic growth targets.
However, Mr. Hung emphasized that any tax adjustments will be considered based on a general principle: only reducing taxes on items that Vietnam cannot yet produce or does not meet domestic consumption demand sufficiently. This helps maintain a balance between opening the market and protecting the domestic manufacturing sector.
Impact of the new tax policy on Vietnam
Vietnam has a large export turnover to the U.S., especially in items such as textiles, electronics, agricultural products, and industrial components. If the U.S. continues its strong protective tax policy, Vietnam's exports may face the risk of being taxed higher or subjected to stricter trade barriers.
Adjusting import taxes on U.S. goods may bring several benefits:
Maintaining trade relations with the U.S.: Reducing import taxes may help Vietnam maintain stable trade relations with the U.S., avoiding retaliatory measures that could harm Vietnam's exports.
Facilitating U.S. goods' access to the Vietnamese market: Some agricultural and industrial products from the U.S. may become more competitive in the Vietnamese market, providing more choices for consumers.
Risk reduction in exports: If Vietnam proactively adjusts tax policies, this could help reduce the risk of being subjected to harsh tariff measures from the U.S.
However, adjusting import taxes also presents significant challenges. If import taxes on U.S. goods decrease, domestic businesses may face greater competitive pressure. Therefore, Vietnam needs to have appropriate support policies to ensure the interests of both domestic enterprises and trade relations with the U.S.
Source: Theblock101.com