US pushes Vietnam to decouple from Chinese tech, sources say
Vietnam is home to large manufacturing operations of tech firms such as Apple and Samsung. PHOTO: AFP
US pushes Vietnam to decouple from Chinese tech, sources say
HANOI - 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 South-east 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 per cent 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 US dependency on Chinese components,' the person added.
The ultimate objective is to speed up US 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 US 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 US-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 US 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.
In 2024, China exported around $44 billion of tech such as electronics components, computers and phones to Vietnam, about 30 per cent of its total exports to the country.
Vietnam shipped $33 billion of tech goods to the US or 28 per cent of the US-bound exports. Both flows are on the rise in 2025, according to Vietnam's customs data.
Vietnam's trade ministry did not reply to Reuters requests for comment.
Separate sources have previously said that US demands were seen as 'tough' and 'difficult' by Vietnamese negotiators.
The US 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 June 15 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 US President Donald Trump in the US, 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 to 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 Mr 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 South-east Asian neighbour and a source of security concerns. REUTERS
Join ST's Telegram channel and get the latest breaking news delivered to you.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Straits Times
2 hours ago
- Straits Times
NATO agrees Hague summit statement with 5% defence spending goal, diplomats say
FILE PHOTO: The logo of NATO is seen at a meeting of the North Atlantic Council in the NATO defence ministers' session together with Sweden as the invitee, at the Alliance's headquarters in Brussels, Belgium February 15, 2024. REUTERS/Johanna Geron/File Photo BRUSSELS - NATO countries agreed a statement on Sunday for their upcoming summit that sets a goal of 5% of GDP for annual defence and security-related spending by 2035, overcoming objections from Spain, diplomats said. The statement has the green light from all 32 NATO members, diplomats said, but will only become official when it is approved by leaders including U.S. President Donald Trump at their summit in The Hague on Wednesday. Spanish Prime Minister Pedro Sanchez had blocked an earlier version of the text, saying that committing to a 5% target would be unreasonable and counterproductive. Spain spent 1.24% of GDP on defence in 2024, according to NATO estimates Diplomats overcame Sanchez's objections by adjusting the text on the spending pledge, changing the language from "we commit" to "allies commit", diplomats said. That allowed Sanchez to claim the commitment would not apply to Spain. "We fully respect the legitimate desire of other countries to increase their defence investment, but we are not going to do so," Sanchez said in an address on Spanish television Sunday. NATO operates by consensus so all of its 32 members have to approve a statement for it to be adopted. NATO officials argue that big defence spending increases are needed to counter a growing threat from Russia and to allow Europe to take on more responsibility for its own security as the United States shifts its military focus to China. The alliance's current defence spending target is 2% of GDP but Trump insisted it should rise to 5% - although he suggested on Friday that target should not apply to the United States. Under a plan by NATO boss Mark Rutte, countries would reach 5% of GDP by boosting their core defence spending goal from 2% to 3.5% and spending a further 1.5% on related items like adapting roads and bridges for military vehicles and cyber security. Rutte had originally proposed countries meet the new target by 2032 but the deadline in the final text is 2035, according to diplomats. There will also be a review of the target in 2029. REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
Straits Times
2 hours ago
- Straits Times
Spain agrees with NATO to skip 5% defence spending target
MADRID - Spain agreed with the NATO military alliance to be excluded from spending 5% of its gross domestic product on defence, Prime Minister Pedro Sanchez said on Sunday. "A 5% spending would be disproportionate and unnecessary," Sanchez said in an address on national television. "We fully respect the legitimate desire of other countries to increase their defence investment, but we are not going to do it," he said, adding Spain could meet all its commitments to NATO, in terms of staff or equipment, by spending only 2.1% of its GDP. Diplomats had said earlier on Sunday the 32 countries comprising NATO had agreed on a statement for the upcoming summit setting a goal of 5% of GDP for annual defence and security related by 2035 overcoming Spain's objection. In a letter sent on Thursday, Sanchez had told NATO chief Mark Rutte his country wanted to opt out of a new 5% spending target. The letter raised concerns that Spain would derail the whole summit. At an estimated 1.28% of GDP, Spain had the lowest proportion of expenditure on defence in the alliance last year, according to NATO estimates. Sanchez agreed in April to accelerate efforts to meet NATO's current target of 2% this year. REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
Business Times
4 hours ago
- Business Times
Central banks in Asia are becoming wary of currency intervention
Some of emerging Asia's biggest central banks look to be dialling back their interventions in the currency market. The central banks of India and Malaysia have reduced the size of some derivatives positions they use to weaken their currencies. Taiwan has allowed its currency to surge against the US dollar in recent weeks and dropped hints that it would be comfortable with more if the moves were 'orderly'. South Korea's giant national pension fund has ended its five-month support of the won. A major reason for these moves is a simple change in the market landscape: The US dollar has tumbled more than 7 per cent this year, easing pressure on emerging market currencies. But strategists and investors also point to the risk of a backlash from US President Donald Trump, amid rising speculation that currency policies will be on the table during a series of ongoing – and high stakes – trade negotiations. 'The threat of being labelled a currency manipulator by the US, especially during this period of tariff negotiations, will act as a deterrent to further heavy FX intervention in local markets,' said Rajeev De Mello, a Geneva-based portfolio manager at GAMA Asset Management. The shifting approach of Asia's central banks to defending their currencies underscores the sweeping changes in global markets since the election of Trump, whose on again-off again tariff threats have roiled asset prices and raised once unthinkable questions about the US dollar's place in the global trading system. South Korea confirmed last month that it had held currency talks with the US, sending the won higher amid talk that Trump wants a weaker US dollar. But White House chief economist Stephen Miran has denied the idea that Washington is working on secret deals to depreciate the greenback, saying the US continues to have a strong US dollar policy. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The greenback has plummeted against major currencies this year, suffering drops of around 10 per cent against the euro and the Swiss franc. Traders are now trying to game out which currencies have the most to gain from a period of reduced intervention. The South Korean won and the Malaysian ringgit are two obvious candidates, since both countries have large trade surpluses, said Gautam Kalani, portfolio manager for BlueBay fixed income, emerging markets, at RBC Global Asset Management. Reduced intervention will speed up the appreciation of these currencies, he said. The Taiwan dollar is also being hotly tipped by strategists. Although Taiwan's central bank is still likely to use intervention to keep volatility in check, most market participants think it will allow the local currency to appreciate further even after hitting multi-year highs. That suggests room to build on what has already been a widespread rally against the US dollar: Taiwan's currency has surged 11 per cent against the greenback this year, making it the region's best performer. The South Korean won is up almost 8 per cent, while the Malaysian ringgit is around 5 per cent higher. The retreat from intervention isn't unanimous across Asia. Bank Indonesia pushed back against volatility on Thursday (Jun 19) as Middle East tensions hit emerging market currencies. The Philippines' central bank has sent mixed messages, calling intervention futile but also saying it might have to do so 'more seriously' if a current slide in the peso continues. The People's Bank of China continues to keep its currency under a tight leash. But for some of emerging Asia's most interventionist central banks, the calculus appears to have shifted in favour of a less hands-on approach. The US Treasury refrained from labelling any country a currency manipulator in its latest foreign-exchange report, released in June. However, it said China, Japan, South Korea, Taiwan, Singapore and Vietnam all met two out of three of its criteria. BLOOMBERG
