HCM City (VNA) – Vietnam’s key commodities,including apparel, leather, and footwear, are forecast to be hurt by the US-Chinatrade war, which began on July 6 when the US imposed new tariffs on a majorityof Chinese imports into the country, worth nearly 34 billion USD.

Chairman of the Ho Chi Minh City Textile, Garment,Embroidery, and Knitting Association Pham Xuan Hong said the US-China tradewar’s impacts on Vietnamese garment firms are now uncertain as most exportorders for 2018 had already been signed before tensions escalated. However, ifthe tensions prolong, the Vietnamese economy is likely to be hurt as China andthe US are the world’s largest economies, as well as key trade partners forVietnam.

For other exports, the war may bring both opportunities andchallenges, he commented, explaining that Vietnam may be able to boostshipments to the US due to the limits on Chinese imports. Furthermore, the depreciatedChinese yuan will give Vietnam an edge when importing materials from China.

As the US imposes high taxes on made-in-China goods, Chinesemanufacturers are likely to move their operations to Vietnam to fill the gap. However,if there is a wave of Chinese investment in Vietnam, the US is likely to limitthe import of goods with Chinese materials, thus putting Vietnam at adisadvantage.

Chairman of the Vietnam Leather, Footwear, and Handbag AssociationDiep Thanh Kiet said the trade war has indirectly hurt the consumption marketbecause US and Chinese consumers have switched to buying necessities instead ofmore luxury items such as leather, footwear, and handbags – leading to a slumpin demand in the two countries.

From another perspective, if major foreign clients decide tomove their production orders to Vietnam from China to prevent high taxes, Vietnam’sleather, footwear, and handbag exports could grow by 9-10 percent from 2017.

As Chinese and foreign enterprises operating in China start to seek alternativemanufacturing bases, Vietnam is highly likely to become one of the top prioritydestinations, which would thus create more jobs, and fuel more exports andeconomic growth.

In the case of a flood of orders, it is forecast that competitionfor workers will be more fierce, resulting in higher workforce costs. IfChinese manufacturers begin a chain of bringing half-completed products toVietnam for finishing, then exporting them to the US, Vietnam is likely to besubjected to the US’s preventive measures as well.

The Vietnamese State was urged to well control border areasand imports via seaports to mitigate fraudulent activity in customs declarations.

Associations and sectors also advised Vietnamese firms toexercise caution when seeking manufacturing connections or serving as a bridgebetween Chinese businesses and the US market, while also recommending they stayaware of fully grasping the market situation to make quick, appropriateresponses. -VNA