Exclusive-US made 'tough' requests to Vietnam in trade talks, sources say

Yahoo

2 days ago

By Francesco Guarascio and Phuong Nguyen
HANOI (Reuters) -The U.S. has sent a "long" list of "tough" requests to Vietnam in its tariff negotiations, including demands that could force the country to cut its reliance on Chinese industrial goods imports, two people briefed about the matter told Reuters.
Washington wants Vietnam-based factories to reduce their use of materials and components from China and is asking the country to control more carefully its production and supply chains, one of the people briefed on the talks said, without elaborating on whether quantitative targets were included.
The list is part of an "annex" to a framework text prepared by U.S. negotiators, according to four people familiar with the matter.
One of them, who had direct access to the document, said the list was sent to Hanoi at the end of May after the conclusion of a second round of talks with Washington aimed at avoiding 46% "reciprocal" tariffs on imports from Vietnam.
The sources declined to be named because those discussions were not public.
Reuters reported on Monday that the Trump administration wants countries to provide their best offers on trade negotiations by Wednesday, citing a draft letter to negotiating partners.
It was unclear which countries would receive the letter, but it was directed at those with active negotiations that included meetings and exchanges of documents. Washington has been engaged in such talks with countries including Vietnam, the European Union, Japan and India.
The sources described the U.S. requests to Vietnam as "tough" and "difficult". It is unclear how Hanoi will respond to Washington's requests and whether it will send its own proposal by Wednesday.
The U.S. Trade Representative did not respond to a request for comment outside U.S. business hours.
Vietnam's trade ministry did not reply to a request for comment.
A source briefed on the matter said if U.S. requests to effectively cut Vietnam's reliance on China were met, they could pose a serious challenge to the Southeast Asian country's economy. Its sprawling manufacturing industry, which produces consumer goods including Apple devices and Nike shoes, is closely integrated into its much bigger neighbour's supply chains.
It might also complicate Vietnam's long-standing policy of maintaining good relations with China, a major foreign investor but also a source of security concerns due to conflicting claims in the South China Sea.
BOOMING TRADE
Vietnam has nearly tripled its exports to the United States since the start of the U.S.-China trade war in 2018, when the first Trump administration imposed wide-ranging tariffs on Beijing, pushing some manufacturers to move production south.
But as exports to the U.S. boomed, Vietnam also vastly expanded imports from China, with their inflow almost exactly matching the value and swings of exports to the United States over the years, each totalling around $140 billion in 2024, data from the U.S. and Vietnam show.
U.S. officials have long accused Vietnam of being used as a waypoint for Chinese goods destined for the United States. At times, according to the allegations, goods had "Made in Vietnam" labels despite having received no or insufficient added value in the country - allowing Chinese exporters to avoid high U.S. duties on their goods.
Aware of the U.S. criticism, Hanoi has launched a crackdown on illegal transhipment of goods. The effect has yet to be seen in trade flows, however, as exports to the United States and imports from China both reached a record high in April, according to the latest data.
Vietnam has also repeatedly shown its willingness to reduce non-tariff barriers and to import more U.S. goods, in line with long-standing requests from Washington.
In recent weeks, officials have reiterated plans to buy U.S. planes and have signed or pledged multiple non-binding agreements, including on the purchase of farm products and energy.
That may, however, not be enough, as U.S. negotiators seek real contracts, one of the people said.