US President to Visit Vietnam September 10
It has been announced that U.S. President Joe Biden will be in Vietnam on Sunday to discuss upgrading ties with the rapidly developing Southeast Asian nation. In the lead-up to the visit, Vietnam Briefing discusses how U.S.-Vietnam trade relations are shaping up.
Vietnam’s Ministry of Foreign Affairs announced Tuesday that the President of the United States, Joseph Biden, would be making an official visit during the weekend. This follows other high-profile U.S. official visits—Vice President Kamala Harris in 2021 and U.S. Secretary of State Antony Blinken last year.
The U.S. has shown a growing interest in deepening its engagement with Vietnam. This interest has surged amidst a complex relationship with China, prompting the world’s largest economy to explore alternative manufacturing hubs in Asia. Vietnam, due to its strategic location and cost-effective workforce, has emerged as a pivotal player in this shifting landscape.
This aligns with the U.S. assuming the role of Vietnam’s primary export destination. In 2022, the bilateral trade volume between these two nations surged to a remarkable US$123 billion. Given this context, Vietnam Briefing examines the evolving dynamics of the U.S.-Vietnam trading relationship and its potential future trajectory.
Trade relations between the US and Vietnam
Trade between Vietnam and the United States has grown exponentially in recent years even in the absence of a comprehensive free trade agreement. The Trans-Pacific Partnership (TPP) agreement, in which Vietnam and the U.S. were expected to participate, could have addressed this gap. However, during the Trump presidency, the U.S. withdrew from the agreement. As a result, trade is still governed by the 2001 U.S.-Vietnam Bilateral Trade Agreement (BTA). Nonetheless, there is a growing chorus of voices advocating for a more comprehensive and contemporary free trade agreement between these two nations.
“The U.S.-Vietnam trade relationship has grown tremendously in recent years. The U.S. is now by far the largest export market for Vietnam, with Vietnamese exports to the U.S. being nearly twice as much as those to China, Vietnam’s second-largest export market. Both the U.S. and Vietnam will be keen to continue to develop this trade relationship,” he says.
Freeman adds: “Biden’s visit also marks the 10th anniversary of the comprehensive partnership between the two countries. The U.S. has expressed interest in upgrading this to a strategic partnership, the second highest level in Vietnam’s diplomatic structure, and ultimately to a comprehensive strategic partnership, the highest level of partnership.”
“Any upgrade in the relationship confirmed during this visit will likely contain components aimed to boost Vietnam’s efforts to develop its high-tech sector in areas, including semiconductor production, artificial intelligence, and electrical vehicle production.”
US FDI projects in Vietnam
Between January and July of 2023, companies from the United States initiated 60 new projects in Vietnam and infused an additional US$450 million in registered capital, spanning both these new ventures and several existing enterprises.
This brings the total accumulated U.S. investment in Vietnam to US$11.76 billion spread across 1,277 projects. This substantial investment has been amassed over a period of just under 30 years. Vietnam has undeniably gained popularity among U.S. firms seeking to diversify their operations away from China. Given this trend, it is highly probable that investment in the country will experience accelerated growth in the near future.
Vietnam FDI projects in the US
Vietnam’s investments in the United States are notably smaller in scale compared to U.S. investments in Vietnam. Nevertheless, there is one significant project on the horizon. In July of this year, Vinfast, a Vietnamese electric car manufacturer, initiated construction on a US$2-billion factory located in North Carolina.
Upon completion, the factory is projected to have an annual production capacity of 150,000 electric vehicles (EV). While the factory’s operational commencement date has faced several delays, EV production is now anticipated to start in 2025.
US exports to Vietnam
The three biggest exports from the U.S. to Vietnam in 2022 were: computers, electrical products, spare parts, and components thereof; other products; and cotton. Notably, Vietnam’s cotton consumption has experienced a remarkable surge, especially considering its rise as a powerhouse in the global garment and textile industry.
Imports into Vietnam from the US in 2022
|Computers, electrical products, spare parts, and components thereof||3,383,057,730|
|Machine, equipment, tools, and instruments||968,101,259|
|Animal fodders and animal fodder materials||772,875,683|
|Other means of transportation, parts and||494,016,814|
|Ferrous waste and scrap||430,489,659|
|Textile, leather, and foot-wear materials and||424,148,132|
|Fruits and vegetables||356,303,683|
|Wood and wooden products||352,638,212|
|Other edible food preparations||270,138,492|
|Milk and milk products||219,913,152|
|Essential Oils and resinoids; perfumery, cosmetic or toilet preparations||80,816,240|
|Iron and steel products||74,336,079|
|Parts and accessories of motor vehicles||49,857,848|
|auxiliaries Glass and glassware||46,863,209|
|Other base metals||41,567,442|
|Ores and other minerals product||32,459,857|
|Other base metal products||30,744,322|
|Insulated wires and cables||28,678,181|
|Still images, video cameras, and parts thereof||28,127,239|
|Precious stones, precious metals, and articles||27,065,565|
|Iron and steel||19,190,052|
|Other petroleum products||16,836,936|
|Pastrycooks, sweets, and cereal products||15,674,314|
|Insecticides, rodenticides, and materials||11,682,443|
|Animal, and vegetable fats and oils||4,880,444|
|Telephones, mobile phones, and parts thereof||1,344,907|
Source: General Department of Customs
Vietnam’s exports to the US
Vietnam’s three biggest exports to the U.S. in 2022 were: machines, equipment, tools, and instruments; textiles and garments; and computers, electrical products, spare parts, and components thereof. This reflects the dynamics of the global value chain, where the U.S. imports raw materials from Vietnam for processing. For instance, cotton imports are turned into finished clothing and apparel in Vietnam before being shipped back to the United States.
Exports from Vietnam to the US in 2022
|Machine, equipment, tools, and instruments||20,181,641,990|
|Textiles and garments||17,359,654,958|
|Computers, electrical products, spare parts, and components thereof||15,940,009,854|
|Telephones, mobile phones, and parts thereof||11,878,221,499|
|Wood and wooden products||8,660,058,522|
|Other means of transportation, parts, and accessories thereof||2,585,838,203|
|Toys and sports requisites; parts and accessories thereof||2,058,569,072|
|Handbags, purses, suit-cases, headgear and||1,840,107,339|
|Iron and steel products||1,180,619,674|
|Iron and steel||845,122,265|
|Insulated wires and cables||776,568,640|
|Other base metals and other base metal products||759,924,351|
|Still images, video cameras, and parts thereof||740,045,108|
|Precious stones, precious metals, and articles||683,279,388|
|Paper and paper products||453,802,639|
|Umbrellas Bamboo and rattan products||318,505,350|
|Tyre cord fabrics and other fabrics for technical uses||282,403,642|
|Fruits and vegetables||247,768,913|
|Textile, leather, and foot-wear materials and auxiliaries||166,845,226|
|Pastrycooks, sweets, and cereals products||159,779,342|
|Animal fodders and animal fodder materials||136,143,737|
|Glass and glassware||94,732,281|
Source: General Department of Customs
The future of trade between Vietnam and the US
As President Biden embarks on his visit to Vietnam this weekend, it is evident that bilateral relations have significantly improved compared to half a century ago.
Over the past two decades, trade between the two nations has thrived, and with U.S. manufacturers and brands actively seeking diversification beyond China, Vietnam is well-placed to benefit.
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