The Trump administration plans to announce an investigation into Vietnam’s currency practices, according to reports.
The US government are accusing Vietnam of alleged currency manipulation in a charge that could lead to major trade sanctions against the Southeast Asian nation.
Departments of Commerce and Treasury in August determined Vietnam had manipulated its currency in a specific trade case involving tires, according to sources.
“Vietnamese relevant agencies are now in contact with the U.S. side to verify this information,” Foreign Ministry spokeswoman Le Thi Thu Hang said during a briefing in Hanoi when asked about the reports.
Sanctions against the Vietnamese could involve those on imports to the US.
Vietnam is one of the US’s ten biggest trading partners with the U.S.’s goods-trade deficit with the Asian nation this year reached $34.8 billion by July.
Trump earlier this year imposed tariffs on China on billions of dollars worth of imports that initiated the trade war between the world’s two biggest economies after a ‘301 investigation’ which they will also use on Vietnam.
Vietnam is one of the Southeast Asian countries “caught in the U.S.-China crossfire and Trump’s angst over trading partners’ currency manipulation,” said Linda Liu, an economist at Maybank Kim Eng Research Pte. in Singapore.
The investigation “has increased the chances of the U.S. imposing tariffs on Vietnam. But the tariffs will likely be targeted and product-specific, rather than sweeping.”
The Trump administration has been particularly hostile to partners with which the US has large trade deficits, meaning those countries that export far more goods to American markets than they import from US producers.
In June of last year, Trump lashed out at Vietnam as “even worse” than China on trade, around the same time that his administration slapped duties on Vietnam’s steel products over suspicions that Chinese-made products were simply being rebranded as made in Vietnam to circumvent US sanctions imposed on Chinese exports.
Hanoi responded by tightening regulations on the origins of its imported industrial inputs.
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