U.S. President Trump’s trade war has Peter Chang scrambling. Sixty components makers that supply Foxconn Technology Group and Samsung Electronics Co. have come knocking at his industrial park northeast of Hanoi in the past three months. They’re looking to skirt U.S. tariffs on Chinese products. “They need to get into Vietnam now—immediately,” says Chang, deputy general director of Shun Far Land Development Co., which operates the Thuan Thanh II Industrial Park, about a 45-minute drive from Hanoi. “We have our building team waiting.”

Chang is hastily negotiating with neighboring landowners to convert rice fields into assembly lines to take advantage of the sudden boom in business. He realizes, though, that it may not last. Even as foreign companies are lining up at Vietnam’s industrial parks, the Trump administration is increasing pressure on the country’s communist leaders to curb its growing trade surplus with the U.S.

Vietnam is caught between contradictory forces unleashed by the U.S.-China trade war: The country of 96 million people is benefiting so much from the impasse that it, too, is at risk of being hit with punitive American duties. Its leaders are trying to convince the Trump administration that they’re fair traders as they seek to protect exports to the U.S., which equaled 20% of gross domestic product last year and almost 26% in the first half of 2019.

The country’s young and comparatively cheap labor force, stable government, and business-friendly environment have turned the Southeast Asian nation into an appealing alternative to China. Intel Corp. and Samsung were early to spot its promise for manufacturing: Today they employ more than 182,000 workers combined at factories that assemble chipsets and smartphones. Makers of sneakers and video game consoles, among others, are looking to shift production to Vietnam in order to evade American tariffs on Chinese goods. Nintendo Co. and Sharp Co.are the most recent technology multinationals to announce plans to relocate operations there. On Aug. 1, Trump unveiled a new round—10% on $300 billion worth of Chinese imports—to take effect at the start of September.

Vietnam’s government granted investment licenses to more than 1,720 projects in the first six months of the year, up 26% from the same period last year. The country expects economic growth in 2019 of as much as 6.8%, among the fastest rates in the world. Yet its dependence on exports makes it particularly vulnerable to the surge in protectionism.

Source: https://www.bloomberg.com/news/articles/2019-08-05/vietnam-won-the-u-s-china-trade-war-but-is-now-in-trouble-itself

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