Hardest-hit Vietnam dangers dropping $25 billion from US tariffs, UN estimates

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HANOI (Reuters) -U.S. tariffs imposed in August threat slashing as much as one-fifth of Vietnam's exports to the US, making it the worst-hit nation in Southeast Asia, in accordance with estimates by the United Nations Improvement Programme.

Vietnam was the world's sixth-largest exporter to America final 12 months with $136.5 billion value of shipped items, U.S. commerce knowledge present. These items are largely produced in factories run by U.S. and overseas multinational corporations or their suppliers.

In a worst-case situation of very excessive tariff-driven U.S. inflation, the 20% duties levied on Vietnamese items may trigger its U.S. exports to fall "over time by greater than 25 billion {dollars}, practically one fifth of the yearly complete," Philip Schellekens, UNDP chief economist for the Asia-Pacific area, instructed Reuters.

Vietnam's finance and trade ministries didn't instantly reply to requests for remark.

The primary complete Vietnamese knowledge launched since tariffs took impact on August 7 present Vietnam's exports to the US, its largest market, fell by 2% in August from July, with a 5.5% drop for footwear, of which Vietnam is the world's second-largest provider, in accordance with the customs division. That adopted a surge in exports earlier than tariffs.

The World Financial institution revised down Vietnam's development forecasts for this 12 months after the U.S. tariffs took impact.

Nike, Adidas and Puma, which produce a big a part of their world output of footwear by means of suppliers in Vietnam, declined to remark.

VIETNAM HIT HARDEST

The 19.2% potential fall in Vietnamese exports to America can be practically twice as excessive as the common 9.7% doable drop in exports from Southeast Asia, essentially the most impacted area within the continent and a significant industrial hub, in accordance with a UNDP report launched final week, one of many first public estimates of the hit on commerce flows because the tariffs took impact.

"No nation in Southeast Asia is extra uncovered to U.S. tariff hikes than Vietnam," mentioned Schellekens, noting solely China in East Asia can be hit tougher in greenback phrases.

Amongst massive Southeast Asian nations, Thailand's U.S. exports may fall 12.7%, Malaysia's 10.4% and Indonesia's 6.4%, the UNDP report mentioned.

The estimated fall of U.S. exports would shave roughly 5% from Vietnam's Gross Home Product, though the tariff influence may take years to totally materialise, and was prone to be mitigated by exporters' absorption of some prices, Vietnam's diversification to different areas and larger home spending.

The UNDP estimates are based mostly on a situation by which duties can be fully handed by means of to U.S. shoppers, damping demand, which thus far has not occurred because the influence on U.S. inflation has been average.

The UNDP didn't consider both the doable impact of 40% tariffs on items transhipped by means of Vietnam, which may have a devastating influence if Washington determined to set strict limits on overseas elements utilized in exported objects, given Vietnam's items extremely depend on Chinese language enter.

The UNDP knowledge didn't think about present tariff exemptions on client electronics which account for about 28% of Vietnam's complete exports to America. Nevertheless, even when Washington upheld these waivers, Vietnam's U.S. exports may nonetheless fall by $18 billion, Schellekens mentioned.