US in Talks to Curb Vietnam’s Alleged Currency Misbehavior

Treasury began “enhanced bilateral engagement” with Vietnam early this year toward developing a plan “with specific actions to address the underlying causes” of Hanoi’s currency undervaluation against the dollar, reported the department Friday. U.S. Trade Representative Katherine Tai signaled strongly this month that President Joe Biden's administration intends to keep U.S. allegations of Vietnam’s currency manipulation actively on the table (see 2104020009). Tai’s predecessor, Robert Lighthizer, opted not to impose remedial tariffs on Vietnam imports in the waning days of the Donald Trump administration for Hanoi’s allegedly improper devaluation of the dong against the dollar, but he did find Vietnam’s practices “actionable” under Section 301, leaving it up to the next administration to “continue to evaluate all available options” (see 2101150052). Vietnam’s “bilateral goods trade surplus” with the U.S. widened in 2020 to $70 billion, “the largest bilateral imbalance on record between the two countries,” reported Treasury. Vietnam’s exports to the U.S. grew about 19.5% in 2020, while imports from the U.S. decreased 8%, it said. “Vietnam’s growing bilateral trade surplus continues to reflect the country’s expanding export capacity, particularly in sectors such as apparel, technology, and electric machinery and equipment,” said the report. “The expanding surplus also reflects Vietnam’s deepening links with global supply chains, with Vietnam being one of the primary beneficiaries of the ongoing shifts in Asian supply chains.” Vietnam generated 19% of all smartphone imports to the U.S. in 2020, plus 5% of laptops and tablets and 24% of TVs under 35 inches, a segment of TVs that were in especially high demand last year during the COVID-19 pandemic.