Vietnam trade surplus with US surges, clouding tariff talks
HANOI: Vietnam's trade surplus with the US expanded sharply in May as exports swelled and its imports from China also jumped, exacerbating sore points with Washington that could hurt Hanoi's efforts to avoid crippling tariffs.
Separate trade data from the US also showed Vietnam's surplus overtook Mexico's in April, lagging only China and the European Union.
US President Donald Trump has vowed to bring down the US trade deficit and the Southeast Asian country faces one of his highest 'reciprocal' tariffs at 46% if a deal cannot be negotiated before a pause on the levies ends in early July.
Despite Hanoi's efforts and pledges to meet Washington's demands, the surplus keeps growing, particularly as exporters rush to get their goods to the US before the tariffs go into effect.
The new figures 'may put some clouds in the sky of these negotiations and put pressure on Vietnam to make additional concessions to reach an agreement,' said Leif Schneider, vice-chairman of the European Chamber of Commerce in Vietnam's legal sector committee.
The surplus with the US surged to US$12.2 billion (RM52 billion) in May, up nearly 42% from a year earlier and 17% higher than April, Vietnamese government data showed yesterday. Exports to the US also climbed roughly 42% from a year earlier to a post-pandemic high of US$13.8 billion.
That stands in contrast to signs that other countries are reining in their exports to the US with the US trade deficit narrowing sharply in April.
Schneider noted that while Vietnam's spike in exports was largely due to front-loading ahead of possible tariffs, and represents a short-term inflation of the surplus, Vietnam is in a particularly hard spot because of its limited imports from the US.
In the first five months of the year, the surplus hit nearly US$50 billion, up 28.5% and putting Vietnam on track to exceed last year's record surplus.
The country's imports from China also posted a post-pandemic record of US$16.2 billion in May, up 21% from a year earlier.
Vietnam is home to large manufacturing operations of US multinationals such as Apple, Intel and Nike , and it also hosts numerous Chinese companies, often suppliers to US firms.
US officials have repeatedly accused Vietnam of being used as a waypoint for Chinese goods destined for the US. They allege that some goods have 'Made in Vietnam' labels despite having received no or insufficient added value in the country – allowing Chinese exporters to avoid high US duties on their goods.
The US has sent a 'long' list of 'tough' requests to Vietnam in its tariff negotiations including demands that could force the country to cut its reliance on Chinese industrial goods imports, two people briefed about the matter have said.
Under US pressure, Hanoi has launched a crackdown on illegal transshipments of goods, mostly from China. It has also repeatedly shown its willingness to reduce non-tariff barriers and to import more US goods including US planes, farm products and energy, although no purchase contracts have been announced yet.
Vietnam's overall trade figures with the world showed exports in May rose 17% from a year earlier to US$39.6 billion, while imports were up 14% at US$39 billion.
Separate government data also out yesterday showed industrial production in May shot up 9.4% from a year earlier, while consumer prices rose 3.24% and retail sales were up 10.2%.
Foreign investment inflows for January-May climbed 7.9% to US$8.9 billion. Foreign investment pledges over the period soared 51.2% to US$18.4 billion. – Reuters
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