As the United States intensifies efforts to reduce trade with China by hiking tariffs, it has greatly boosted imports from Vietnam, a country that relies heavily on Chinese inputs for much of its exports. This surge in the China-Vietnam-U.S. trade has vastly widened trade imbalances, with Vietnam posting a surplus with Washington close to $105 billion in 2022 – 2.5 times bigger than in 2018 when the Trump administration first put heavy tariffs on Chinese goods.
Vietnam now has the fourth-highest trade surplus with the United States, lower only than China, Mexico, and the European Union. This increasingly symbiotic relationship emerges from trade, customs, and investment data reviewed by Reuters from the United Nations, the U.S., Vietnam, and China, and is confirmed by preliminary estimates from the World Bank and several economists and supply chain experts.
The data shows that Vietnam’s export boom has been fueled by imports from neighboring China, with inflows from China almost exactly matching the value and swings of exports to the United States in recent years. In preliminary estimates shared with Reuters, the World Bank reckons a 96% correlation between the two flows, up from 84% before Donald Trump’s presidency.
This suggests that while the U.S. aims to reduce its trade dependence on China, it has inadvertently created a situation where Vietnam has become a conduit for Chinese goods to enter the American market. The surge in Vietnam’s trade surplus with the U.S. highlights the unintended consequences of the tariff war between the world’s two largest economies.