US holds back on imposing duties on Vietnamese goods

By Hannah Abdulla | 18 January 2021 just style Font size Email Print USTR is not curently taking any specific actions regarding Vietnam tariffs but is continuing to "evaluate all available options" The US has decided it will not impose tariff increases on goods from Vietnam for the time being, bringing relief to footwear and apparel brands and retailers across the country. Outlining the findings of its Section 301 investigation into Vietnam's currency practices, the US Trade Representative (USTR) said it had concluded the country's acts, policies and practices, including excessive foreign exchange market interventions and other related actions "taken in their totality, are unreasonable and burden or restrict US commerce".

"Unfair acts, policies and practices that contribute to currency undervaluation harm US workers and businesses, and need to be addressed," said USTR Robert Lighthizer. "I hope that the United States and Vietnam can find a path for addressing our concerns." While the USTR said it is not taking any specific actions in connection with the findings at this time, it will continue to evaluate all available options. A separate Section 301 investigation on Vietnam's timber practices is still pending.

"There is never a good time for tariffs, but they would be particularly harmful as all Americans and this industry continue to be impacted by the effects of COVID-19," says Steve Lamar, president and CEO of the American Apparel & Footwear Association (AAFA). "Tariffs are taxes on American consumers, American workers, and American companies. This has become abundantly clear during the US-China trade war. Vietnam is an important trading partner, especially as businesses try to rebalance their sourcing away from China. Adding tariffs to imports from Vietnam would hurt those efforts and investments." He adds: "We look forward to continuing a dialogue with USTR under the leadership of USTR-designate Katherine Tai and the incoming Biden administration as they seek remedy with Vietnam." Last week, a multi-industry letter signed by 200 company and trade association CEOs was submitted to the USTR Section 301 hearings on Vietnam currency valuation and urged the administration to avoid using tariffs as a remedy in the investigations.

If additional tariffs are applied to US imports from Vietnam, it would mean that more than half of all apparel and footwear, and more than three-quarters of all accessories sold in the US, would be hit with cumulative tariffs as high as 25-50%.

Many companies including footwear brands Nike and Adidas have shifted sourcing to Vietnam as a direct result of the China 301 tariffs and supply chain diversification efforts. Lower wages and vertically integrated supply chains help make it increasingly attractive to source from. As well as being the second-largest supplier of apparel, footwear, and travel goods to the US, Vietnam is also a key supplier of raw materials used by US manufacturers, and a major market for US textile and chemical exports.

According to the US International Trade Commission, US textile and apparel exports to Vietnam increased by $97m from 2015 to 2019. During that same time, US footwear exports to Vietnam increased by $170m.

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