Latest news with #USHarmonizedTariffSchedule
AllAfrica
6 days ago
- Business
- AllAfrica
Vietnam's FDI firms caught in Trump's transshipment crossfire
The US tariff rate officially announced on Vietnam on July 31, 2025, has deepened anxiety among foreign direct-invested (FDI) enterprises regarding penalties for transshipment. Vietnamese exports to the US, as of August 7, are subjected to a 20% tariff, while goods deemed as 'transshipped' will face a 40% tariff. However, no clear criteria for what qualifies as transshipment have been announced by the US. The US Harmonized Tariff Schedule (HTSUS) states that if US Customs determines a product shows signs of being 'transshipped to evade duties,' it will face the additional 40% tariff. While there is a grace period—goods clearing customs before October 5, 2025, will not be subject to the new rates—the lack of clear criteria for enforcement is paralyzing long-term decision-making. Faced with rising costs and declining revenues, some FDI enterprises have already begun scaling down production or gradually shifting their supply chains out of the country. These developments have exposed a core structural weakness in Vietnam's economy, namely its vulnerability to fluctuations in global trade policy. This is because Vietnam's export-driven economy depends on FDI for over 70% of its total export value. Moreover, the manufacturing sector is heavily reliant on imported raw materials, with around 80% coming from China. Meanwhile, the proportion of goods that meet true localization standards—produced entirely by Vietnamese-owned businesses with domestic technology—remains low at just 5–10% of total export value. If 'transshipped' goods are interpreted strictly to mean any product not fully controlled by a Vietnamese production process, then nearly all goods exported from Vietnam could be classified as transshipment and face the devastating 40% tariff. At a time when Vietnam is striving to upgrade its position in the global value chain, this ambiguity could become a significant barrier to attracting high-quality FDI. For now, the situation remains fluid. Vietnam may continue negotiations to lower the tariff rates, with General Secretary To Lam expected to visit Washington. Washington may also reopen talks with other countries, with President Donald Trump quoted by NBC News as saying, 'The US is ready to keep the door open for attractive offers.' The new US tariff policy has already triggered significant cost restructuring among FDI enterprises in Vietnam. According to a June 2025 survey by PwC, 86% of businesses in Vietnam expressed concern about the tariffs' impact and a striking 44% of FDI companies have already begun relocating factories or dispersing production to other countries. Cargill, a major US corporation with over 25 years in Vietnam, has already closed several plants and exited the aquaculture sector. Similarly, Intel has postponed a planned US$1 billion investment to expand its chip production and has initiated global layoffs that include its Vietnamese staff. This has created a 'domino effect,' with other tech giants like Samsung and LG also cutting their workforces and scaling back production in Vietnam. From an economic perspective, tariffs inevitably lead to 'cost-push' inflation, as businesses pass the additional costs onto the final product. As Dr Phung Giang told BBC Vietnamese, this could make Vietnamese goods significantly less competitive in the American market, which currently accounts for 30% of Vietnam's total export revenue. The textile and garment industry, which accounts for 35–40% of that export value, illustrates the problem. According to Hoang Manh Cam, deputy chief of the Office of the Vietnam National Textile and Garment Group (Vinatex), a mere 1% price increase can lead to a 1–2% drop in demand. This is compounded by other costs. Le Hang, the deputy secretary-general of the Vietnam Association of Seafood Exporters and Producers (VASEP), notes that exporters face multiple surcharges that can total up to 75% of a shipment's value. On top of that, logistics costs have skyrocketed, with the price of shipping a container to the US nearly doubling in recent months from $1,850 to between $2,950-$3,500. As export-oriented businesses face mounting external costs, inflation is spreading across Vietnam's domestic economy. In the first half of the year, the State Bank of Vietnam (SBV) injected an additional 2.5 quadrillion dong ($95.3 billion) into the economy, causing the Vietnamese currency to depreciate to a record low against the US dollar, while consumer inflation has risen by 3.57%. While the SBV's monetary policy director, Pham Chi Quang, stated this is a deliberate policy to support businesses, other experts disagree. Dr Le Thi Thu Trang of the Friedrich Naumann Foundation argues this is placing dual cost pressures on exporters—higher prices for imported materials and increased domestic operating expenses. Dr Le Hai Ha from the University of Commerce concurs. He says that the core issue remains Vietnam's underdeveloped domestic industries and high rate of localization, which forces companies to rely on expensive imported materials. In addition to rising costs, FDI enterprises now face declining revenues as international orders evaporate. According to the International Trade Centre (ITC), escalating trade tensions have triggered mass order cancellations across global supply chains—a trend that hit Vietnam immediately after the new US tariff policy was announced. In the first half of April, Ha Chi Minh City's customs department reported that 50% of export orders to the US were abruptly canceled. In Binh Duong Province (now part of Ho Chi Minh City), over $700 million worth of export declarations were canceled in just four days. This wave of cancellations has sent a shock through the broader economy. Vietnam's Purchasing Managers' Index (PMI) recently dropped to 48.9%, its third consecutive monthly decline. According to S&P Global, surveyed exporters overwhelmingly cited the new US tariff policy as the primary cause for the sharp drop in new orders. Key sectors like textiles, footwear and electronics have been hit particularly hard. Domestic suppliers are also feeling the pain. 'As soon as the US announced tariffs on Vietnam, one of our clients suspended an order worth several million US dollars,' said Nguyen Van Ca of Phuc Can Industrial Co, Ltd. Leaders in the textile and wood-processing industries report similar challenges, with stable, year-long contracts being replaced by precarious short-term agreements, typically for only three months. Ultimately, this disruption is delivering a direct shock to Vietnam's labor market. A recent report from the Vietnam Chamber of Commerce and Industry (VCCI) found that more than 637,000 workers have already been affected by these order reductions, with over 53,000 having lost their jobs. Projections from the State Organization and Labor Science Institute suggest this trend will continue, with another 285,000 workers potentially at risk. For years, Vietnam was a primary beneficiary of the US-China trade war, successfully positioning itself as a 'China + 1' destination for investors looking to safeguard their supply chains. The country's low labor costs, geopolitically strategic location and generous incentives made it a top alternative, fueling a wave of foreign investment that peaked as early as 1996, just a decade after the Doi Moi reforms began. But the new US tariff policy is turning that strength into weakness. The tide is turning because, for nearly 40 years, the government has prioritized attracting FDI over developing domestic production capacity. This created a cycle of dependency, leaving the economy highly vulnerable to global economic disruptions. Analysts from Singapore's UOB Bank note that this vulnerability stems from Vietnam's open economy, where exports account for a staggering 83% of GDP—the second-highest ratio in ASEAN, behind only Singapore (182%). The consequences of this vulnerability are already being priced in. Amid the ongoing tariff 'storm,' the International Monetary Fund (IMF) projects that Vietnam's GDP growth could fall to 5.2%, while Moody's Analytics has revised its 2025 forecast downward from 6.5% to 5.5%, citing the direct impact of the US policy. With these mounting challenges exposing the structural weaknesses of Vietnam's economy, the question now is: what policies will Vietnamese policymakers adopt to provide timely support, retain foreign investors and build a more sustainable and resilient future? This article was published in English by The Vietnamese and originally published in Vietnamese by Luat Khoa Magazine. An edited version is republished here with kind permission.
Yahoo
16-04-2025
- Business
- Yahoo
‘Pink tariffs' cost women more than $2 billion a year
President Donald Trump is using tariffs to disrupt nearly everything about the global trade order. Except for a tariff policy that favors men over women. For decades, the US tariff system has taxed women's clothing more heavily than men's. Tariffs on women's clothing are currently about three percent higher than men's, a policy that's known as 'pink tariffs' — similar to the 'pink tax' that makes the same products for women more expensive than men's. That means women pay an average extra dollar per garment compared to men, costing them more than $2 billion a year, according to research by Edward Gresser, vice president and director for trade and global markets at the Progressive Policy Institute, a left-leaning think tank. And with Trump imposing 10% tariffs on most trading partners, with even higher levies for Canada, Mexico and China, the cost for women could easily go higher. 'As he is instituting massive new tariffs, President Trump is missing a chance to tackle historically regressive and misogynistic traits' of the global free trade system, said Steve Lamar, the president of the American Apparel & Footwear Association. Most manufactured apparel and footwear are classified by gender in the US Harmonized Tariff Schedule (HTS), which sets out the tariff rates for all categories of merchandise imported into the United States. Tariff rates on women's clothing were, on average, 16.7% in 2022 — 2.9 percentage points higher than the 13.6% average tariff rate for men's clothing, according to Gresser. Breaking it down to individual items: Women's suits in 2017, for example, were subject to a 15.1% tariff rate, while men's suits were subject to a 13.3% tariff. Women's underwear was hit with a 12.8% tariff, while men's underwear had an 8.6% tariff. There's no single reason why tariffs on women's clothing are higher than men's, but the policy has taken shape over decades. During the 1930s and 1940s, when America helped design the global free trading system, women's clothing production was a smaller industry while men's clothing was a major source of employment and an economic driver. US textile and apparel manufacturers at the time were more focused on lobbying to lower tariffs and end trade barriers on men's clothing, trade experts say. The current tariff gap is a relic of that old trade regime. Companies have attempted to end the gender bias in tariff rates. Steve Madden, Asics, Columbia Sportswear and other companies sued the government in 2007 to strike down the tariff policy, but the suit failed because courts ruled that the tariff gaps were not designed to be discriminatory. There also has been little movement from the federal government to fix the policy. But this year, two Democratic lawmakers, Rep. Lizzie Fletcher of Texas and Rep. Brittany Pettersen of Colorado, introduced legislation known as the 'Pink Tariffs Study Act' that would direct the Treasury Department and other agencies to examine the impact of tariffs on women and other consumer groups. Trump's tariffs could unintentionally narrow the gender gap by raising the floor of tariffs on men's clothing, however, said Lori Taylor, a professor in the department of public service and administration at Texas A&M who studies trade policy. But Trump's tariffs will ultimately impact women more than men because women spend more money on average on clothing. In 2023, household spending on women's apparel averaged $655, compared with $406 for men's apparel, according to the Bureau of Labor Statistics. 'My policy preference would have been to lower tariffs for both men's and women's clothing' to reduce the gap, Taylor said. Trump's tariffs will have an outsized impact on clothing because nearly all clothing sold in the United States is imported. Consumers immediately will face 64% higher apparel prices from Trump's tariffs, according to the Yale Budget Lab. Tariff disparities aren't just between women and men. Tariffs will hurt lower-income households and the goods they rely on more than wealthier households. That's because lower-income consumers spend a greater share of their income on basic clothing and necessities than higher-income consumers. Tariffs also tax cheap, mass-market goods at higher rates than luxury items. Socks, underwear, t-shirts, sneakers and other clothing basics have higher tariff rates than luxury items because tariffs vary by fabric content, said Sheng Lu, a professor of fashion and apparel studies at the University of Delaware. High-end fabrics such as wool, cashmere and silk have lower tariff rates than the cotton, polyester and nylon used to manufacture inexpensive clothing and sneakers. Prices for clothing basics will also rise more quickly than luxury items because of Trump's tariffs, trade experts say, because basics typically have little markup. That leaves companies with less room to absorb higher costs. 'The cost increase will be higher at the low end than at the luxury end,' Edward Gresser said. 'Hourly-wage America will be carrying a lot of the tariff burden.' Sign in to access your portfolio
Yahoo
16-04-2025
- Business
- Yahoo
‘Pink tariffs': Tariffs on women's clothes are higher than men's
President Donald Trump is using tariffs to disrupt nearly everything about the global trade order. Except for a tariff policy that favors men over women. For decades, the US tariff system has taxed women's clothing more heavily than men's. Tariffs on women's clothing are currently about three percent higher than men's, a policy that's known as 'pink tariffs' — similar to the 'pink tax' that makes the same products for women more expensive than men's. That means women pay an average extra dollar per garment compared to men, costing them more than $2 billion a year, according to research by Edward Gresser, vice president and director for trade and global markets at the Progressive Policy Institute, a left-leaning think tank. And with Trump imposing 10% tariffs on most trading partners, with even higher levies for Canada, Mexico and China, the cost for women could easily go higher. 'As he is instituting massive new tariffs, President Trump is missing a chance to tackle historically regressive and misogynistic traits' of the global free trade system, said Steve Lamar, the president of the American Apparel & Footwear Association. Most manufactured apparel and footwear are classified by gender in the US Harmonized Tariff Schedule (HTS), which sets out the tariff rates for all categories of merchandise imported into the United States. Tariff rates on women's clothing were, on average, 16.7% in 2022 — 2.9 percentage points higher than the 13.6% average tariff rate for men's clothing, according to Gresser. Breaking it down to individual items: Women's suits in 2017, for example, were subject to a 15.1% tariff rate, while men's suits were subject to a 13.3% tariff. Women's underwear was hit with a 12.8% tariff, while men's underwear had an 8.6% tariff. There's no single reason why tariffs on women's clothing are higher than men's, but the policy has taken shape over decades. During the 1930s and 1940s, when America helped design the global free trading system, women's clothing production was a smaller industry while men's clothing was a major source of employment and an economic driver. US textile and apparel manufacturers at the time were more focused on lobbying to lower tariffs and end trade barriers on men's clothing, trade experts say. The current tariff gap is a relic of that old trade regime. Companies have attempted to end the gender bias in tariff rates. Steve Madden, Asics, Columbia Sportswear and other companies sued the government in 2007 to strike down the tariff policy, but the suit failed because courts ruled that the tariff gaps were not designed to be discriminatory. There also has been little movement from the federal government to fix the policy. But this year, two Democratic lawmakers, Rep. Lizzie Fletcher of Texas and Rep. Brittany Pettersen of Colorado, introduced legislation known as the 'Pink Tariffs Study Act' that would direct the Treasury Department and other agencies to examine the impact of tariffs on women and other consumer groups. Trump's tariffs could unintentionally narrow the gender gap by raising the floor of tariffs on men's clothing, however, said Lori Taylor, a professor in the department of public service and administration at Texas A&M who studies trade policy. But Trump's tariffs will ultimately impact women more than men because women spend more money on average on clothing. In 2023, household spending on women's apparel averaged $655, compared with $406 for men's apparel, according to the Bureau of Labor Statistics. 'My policy preference would have been to lower tariffs for both men's and women's clothing' to reduce the gap, Taylor said. Trump's tariffs will have an outsized impact on clothing because nearly all clothing sold in the United States is imported. Consumers immediately will face 64% higher apparel prices from Trump's tariffs, according to the Yale Budget Lab. Tariff disparities aren't just between women and men. Tariffs will hurt lower-income households and the goods they rely on more than wealthier households. That's because lower-income consumers spend a greater share of their income on basic clothing and necessities than higher-income consumers. Tariffs also tax cheap, mass-market goods at higher rates than luxury items. Socks, underwear, t-shirts, sneakers and other clothing basics have higher tariff rates than luxury items because tariffs vary by fabric content, said Sheng Lu, an associate professor of fashion and apparel studies at the University of Delaware. High-end fabrics such as wool, cashmere and silk have lower tariff rates than the cotton, polyester and nylon used to manufacture inexpensive clothing and sneakers. Prices for clothing basics will also rise more quickly than luxury items because of Trump's tariffs, trade experts say, because basics typically have little markup. That leaves companies with less room to absorb higher costs. 'The cost increase will be higher at the low end than at the luxury end,' Edward Gresser said. 'Hourly-wage America will be carrying a lot of the tariff burden.' Sign in to access your portfolio
CNN
16-04-2025
- Business
- CNN
‘Pink tariffs': Tariffs on women's clothes are higher than men's
President Donald Trump is using tariffs to disrupt nearly everything about the global trade order. Except for a tariff policy that favors men over women. For decades, the US tariff system has taxed women's clothing more heavily than men's. Tariffs on women's clothing are currently about three percent higher than men's, a policy that's known as 'pink tariffs' — similar to the 'pink tax' that makes the same products for women more expensive than men's. That means women pay an average extra dollar per garment compared to men, costing them more than $2 billion a year, according to research by Edward Gresser, vice president and director for trade and global markets at the Progressive Policy Institute, a left-leaning think tank. And with Trump imposing 10% tariffs on most trading partners, with even higher levies for Canada, Mexico and China, the cost for women could easily go higher. 'As he is instituting massive new tariffs, President Trump is missing a chance to tackle historically regressive and misogynistic traits' of the global free trade system, said Steve Lamar, the president of the American Apparel & Footwear Association. Most manufactured apparel and footwear are classified by gender in the US Harmonized Tariff Schedule (HTS), which sets out the tariff rates for all categories of merchandise imported into the United States. Tariff rates on women's clothing were, on average, 16.7% in 2022 — 2.9 percentage points higher than the 13.6% average tariff rate for men's clothing, according to Gresser. Breaking it down to individual items: Women's suits in 2017, for example, were subject to a 15.1% tariff rate, while men's suits were subject to a 13.3% tariff. Women's underwear was hit with a 12.8% tariff, while men's underwear had an 8.6% tariff. There's no single reason why tariffs on women's clothing are higher than men's, but the policy has taken shape over decades. During the 1930s and 1940s, when America helped design the global free trading system, women's clothing production was a smaller industry while men's clothing was a major source of employment and an economic driver. US textile and apparel manufacturers at the time were more focused on lobbying to lower tariffs and end trade barriers on men's clothing, trade experts say. The current tariff gap is a relic of that old trade regime. Companies have attempted to end the gender bias in tariff rates. Steve Madden, Asics, Columbia Sportswear and other companies sued the government in 2007 to strike down the tariff policy, but the suit failed because courts ruled that the tariff gaps were not designed to be discriminatory. There also has been little movement from the federal government to fix the policy. But this year, two Democratic lawmakers, Rep. Lizzie Fletcher of Texas and Rep. Brittany Pettersen of Colorado, introduced legislation known as the 'Pink Tariffs Study Act' that would direct the Treasury Department and other agencies to examine the impact of tariffs on women and other consumer groups. Trump's tariffs could unintentionally narrow the gender gap by raising the floor of tariffs on men's clothing, however, said Lori Taylor, a professor in the department of public service and administration at Texas A&M who studies trade policy. But Trump's tariffs will ultimately impact women more than men because women spend more money on average on clothing. In 2023, household spending on women's apparel averaged $655, compared with $406 for men's apparel, according to the Bureau of Labor Statistics. 'My policy preference would have been to lower tariffs for both men's and women's clothing' to reduce the gap, Taylor said. Trump's tariffs will have an outsized impact on clothing because nearly all clothing sold in the United States is imported. Consumers immediately will face 64% higher apparel prices from Trump's tariffs, according to the Yale Budget Lab. Tariff disparities aren't just between women and men. Tariffs will hurt lower-income households and the goods they rely on more than wealthier households. That's because lower-income consumers spend a greater share of their income on basic clothing and necessities than higher-income consumers. Tariffs also tax cheap, mass-market goods at higher rates than luxury items. Socks, underwear, t-shirts, sneakers and other clothing basics have higher tariff rates than luxury items because tariffs vary by fabric content, said Sheng Lu, an associate professor of fashion and apparel studies at the University of Delaware. High-end fabrics such as wool, cashmere and silk have lower tariff rates than the cotton, polyester and nylon used to manufacture inexpensive clothing and sneakers. Prices for clothing basics will also rise more quickly than luxury items because of Trump's tariffs, trade experts say, because basics typically have little markup. That leaves companies with less room to absorb higher costs. 'The cost increase will be higher at the low end than at the luxury end,' Edward Gresser said. 'Hourly-wage America will be carrying a lot of the tariff burden.'
