PPAI has joined with 75 other trade organizations representing a broad range of industries in a letter to U.S. Trade Representative Katherine Tai advocating against the imposition of Section 301 tariffs on imports from Vietnam. The letter is in response to persistent reports that the government was considering tariffs as a response to its currency manipulation and illegal timber investigations.
The investigations began in October 2020. Former USTR Robert Lighthizer found that Vietnam’s undervalued currency threatened U.S. commercial interests but left it to the Biden Administration to determine an appropriate response. The USTR has not issued a finding regarding whether Vietnam’s furniture industry uses illegally harvested lumber. The one-year deadline to complete both investigations is fast approaching, with the USTR office only commenting that they were “ongoing” without releasing further details.
The letter notes that the U.S. Treasury, in its recent “Report on Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States,” concluded that there is insufficient evidence that Vietnam manipulates its exchange rate and instead said that it would enhance engagement with the country. Such engagement offers significant benefits as financial diplomacy can help finance ministries and central banks mitigate imbalances and work together to guard against balance of payments problems. “Imposing Section 301 tariffs at a time when Treasury recently stated Vietnam is not manipulating its currency would undermine efforts to develop a more coherent framework for financial diplomacy. Such a move would leave foreign governments understandably confused—and less likely to heed Washington’s advice.”
The letter’s signatories also suggested that due to questions about the current investigation into the use of illegally harvested timber, an investigation by the Animal and Plant Health Inspection Service under the Lacey Act would be the more appropriate response, rather than tariffs.
Vietnam’s prominence as a source of imports has grown in recent years largely due to the U.S. application of substantial Section 301 tariffs on hundreds of billions of dollars’ worth of imports from China. This has led importers to look to Vietnam, perhaps more than any other country in Asia, as a sensible, trustworthy alternative to China. The letter points out, “Imposing Section 301 tariffs on goods from Vietnam in either investigation would be a peculiar response to developments that are, in a sense, the hoped-for outcome of U.S. policy. In addition, imports of raw materials and industrial components are critical inputs used by U.S. manufacturers of finished goods, and Section 301 tariffs on these products would undermine U.S. manufacturers’ competitiveness. Further, it would create additional global supply chain disruptions during one of the worst logistics crises by raising costs for U.S. workers, families and businesses.”
In addition, Vietnam is a major export market for U.S. textiles, chemicals, hardwood, aerospace, and environmental and energy products as well as key agricultural products.
A strong relationship with Vietnam is an important element of the administration’s efforts to address geostrategic challenges and reassert American diplomatic and economic leadership in the region,” the letter concludes. “If the administration has concerns about elements of the U.S. trading relationship with Vietnam, then engagement is required—not more tariffs.”
