For importers whose supply chains have been financially impacted by Section 301 duties imposed on goods Made in China, Vietnam is one country viewed as a potential alternative sourcing country. The United States Trade Representative earlier this month announced it opened an investigation into Vietnam, potentially finding that a second country is trading unfairly in a region many importers utilize as a key sourcing location in their supply chains.
Vietnam Currency and Timber Spur Investigation
The USTR is opening its investigation based on two concerns. First, undervaluation of their currency impacting the exchange rate and the price paid for goods by US companies within the country. Their second investigation is into the importation and use of illegally harvested timber for Vietnam’s furniture industry which has seen explosive growth since the US imposed triple-digit antidumping duties on exports of Chinese wooden bedroom furniture and similar products.
A Section 301 investigation is opened when the US believes there are unfair trade practices affecting the American market. Check out this great explanation on Wikipedia.
Vietnam has seen a tremendous amount of investment in both manufacturing and infrastructure since the imposition of Section 301 duties on Chinese exports began in 2018 with a small, narrowly-targeted list of items and has grown to four lists and includes the majority of the Harmonized Tariff Schedule.
Vietnam’s growth is detailed in a story published Monday highlighting Vietnam’s Bac Giang province, home to an increasing number of factories manufacturing items like Apple’s AirPods. According to Bloomberg’s reporting, the local economy expanded by 10.9% through September from a year earlier compared to 2.1% growth for the entire country. The Vietnamese government is building a river port for shipping, foreign-investment growth is doubling annually and the province forecasts the value of exports this year will reach $11 billion, a tenfold leap in six years.
Section 301 Duties Can Impact Importers
For importers whose supply chains include Vietnam, we strongly encourage reading the published announcements on these two separate investigations published in the Federal Register here and here. Comments are due by November 12, 2020.
Importers should be cautious and aware that in the current trade climate that simply diversifying their supply chains doesn’t automatically inoculate them from potential trade sanctions or risks. Mach 1 is your partner for monitoring trade policy and is focused on keeping you informed and up-to-date.
For more information on additional duties covered by antidumping, countervailing, Section 301 or Section 232 investigations, contact our Mach 1 Trade Services team today by calling (800) 553-7774.
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