US pushes Vietnam to decouple from Chinese tech, sources say

Yahoo

5 hours ago

By Francesco Guarascio
HANOI (Reuters) -The United States is pushing Vietnam in tariff talks to reduce the use of Chinese tech in devices that are assembled in the country before being exported to America, three people briefed on the matter said.
Vietnam is home to large manufacturing operations of tech firms such as Apple and Samsung, which often rely on components made in China. Meta and Google also have contractors in Vietnam that produce goods such as virtual reality headsets and smartphones.
The Southeast Asian nation has been organising meetings with local businesses to boost the supply of Vietnamese parts, with firms showing willingness to cooperate but also warning they would need time and technology to do so, according to one person with knowledge of the discussions.
The Trump administration has threatened Vietnam with crippling tariffs of 46% which could significantly limit access for Vietnam-made goods to their main market and upend the Communist-run country's export-oriented growth model.
Vietnam has been asked "to reduce its dependency on Chinese high-tech," said one person familiar with the discussions. "That is part of the restructuring of supply chains and would in turn reduce U.S. dependency on Chinese components," the person added.
The ultimate objective is to speed up U.S. decoupling from Chinese high-tech while increasing Vietnam's industrial capacity, a second person said, citing virtual reality devices as an example of Vietnam-assembled products that are too dependent on Chinese technology.
All sources declined to be identified as the discussions were confidential. Reuters was not able to learn if the U.S. has proposed numerical targets such as caps on Chinese content for "Made in Vietnam" goods or different tariff rates based on the amount of Chinese content.
Apple, Samsung, Meta and Google did not reply to Reuters requests for comment.
As the U.S.-imposed deadline of July 8 nears before the tariffs take effect, the timing and scope of a possible deal remain unclear.
All sources stressed that while the U.S. has made broader requests for Vietnam to reduce its reliance on China, tackling the issue of Chinese high-tech content in exports was a key priority.
Last year, China exported around $44 billion of tech such as electronics components, computers and phones to Vietnam, about 30% of its total exports to the country. Vietnam shipped $33 billion of tech goods to the United States or 28% of the U.S.-bound exports. Both flows are on the rise this year, according to Vietnam's customs data.
Vietnam's trade ministry did not reply to Reuters requests for comment. Separate sources have previously said that U.S. demands were seen as "tough" and "difficult" by Vietnamese negotiators.
The U.S. also wants Vietnam to crack down on the practice of shipping Chinese goods to America with misleading "Made in Vietnam" labels that draw lower duties - which Vietnam is also trying to heed.
The ministry said on Sunday that a third round of talks last week in Washington ended with progress, but critical issues remain unresolved.
Vietnam's ruling Communist Party chief To Lam intends to meet U.S. President Donald Trump in the United States, possibly in late June, officials with knowledge of the matter said. No date has been announced for the trip.
The White House and Vietnam's foreign ministry did not respond to requests for comment on the possible visit.
NOT TOO FAST
Local firms attending meetings organised by the trade ministry in recent weeks expressed a general willingness to adapt, but many warned that instant changes "would destroy business", according to one of the sources.
Vietnam has been slowly developing an industrial ecosystem with local suppliers but it has a long way to go before it can match China's advanced supply chains and cheaper pricing, industry executives say.
"Vietnam is about 15–20 years behind China in somewhat fully replicating its supply chain scale and sophistication, but it's catching up fast, especially in key sectors like textiles and electronics," said Carlo Chiandone, a Vietnam-based supply chain expert.
Abrupt changes to existing practices may hurt Vietnam's delicate relationship with China, which is both a major investor in its Southeast Asian neighbour and a source of security concerns.