The Trump administration's imposition of temporary tariffs of 15% on global imports raises the risk that tariffs will continue for a longer period, in more sophisticated forms.

On February 20, the U.S. Supreme Court declared that the International Emergency Economic Powers Act (IEEPA), used to impose global tariffs, was inappropriate and invalidated the U.S. government's tariff revenues on goods from other countries.

Identifying the advantages and disadvantages for Viet Nam.

Interestingly, immediately after the ruling, the US government responded by using another legal basis to continue imposing tariffs: Section 122 of the Trade Act of 1974, which imposes temporary tariffs on imports worldwide at a rate of 15%, for up to 150 days.

In fact, IEEPA is the legal basis for national security emergencies. Section 122, on the other hand, is specifically designed for situations of balance of payments surplus – when a prolonged trade deficit requires special tax measures.

Notably, the U.S. Trade Representative (USTR) also recently announced it will initiate investigations under Section 301 of the Trade Act of 1974 into practices deemed “unreasonable, discriminatory, or burdensome” to U.S. trade, with a scope expected to cover everything from industry and digital technology to pharmaceuticals and seafood, and with a consultation and tariff process that is “long-lasting” and more robust than the effect of Section 122.

These are clear signals that the Trump administration will mobilize various legal platforms to continue its trade rebalancing goals, and therefore the tariff risks will persist in more sophisticated forms.

For Viet Nam, these new developments from the United States present both opportunities and challenges. On the positive side, the adjustment of tariffs under Section 122 with clear ceilings and deadlines can help minimize the risk of sudden, high tariffs. The 150-day period is seen as room for negotiation, allowing authorities and businesses to proactively adjust their strategies.

However, in the long term, the potential risks remain significant, especially given recent reports indicating a record trade surplus between Viet Nam and the United States. The US government has also repeatedly raised concerns about Viet Nam being exploited as a transit point for third-country goods entering the US. This issue could easily be addressed through Section 301 with anti-circumvention duties, or through enhanced border controls targeting specific industries, significantly impacting businesses.

Therefore, the appropriate approach for Viet Nam at this stage remains a flexible approach seeking opportunities for dialogue, but flexibility does not mean passivity. At the state level, it is necessary to maintain regular communication channels, update data, and offer a package of practical solutions to balance trade, expand imports from the United States of goods that Viet Nam has long-term needs, encourage two-way investment projects, and decisively address fraudulent origin declarations and tax evasion.

When the United States prioritizes the "rebalancing" of trade, the most effective response is often not to debate right and wrong in the media, but to provide a roadmap and data to demonstrate that Viet Nam shares the goal of stability, mutual benefit, and adherence to the rules of the game.

What should businesses do?

For businesses, the most important thing remains continuous information gathering and supply chain transparency. Recent developments suggest that the US government will increasingly tighten control over trade. If investigations under Section 301 are expanded as announced by the USTR, businesses need to prepare documentation proving the origin, localization rate, production process, and compliance of input materials now, instead of waiting until they are requested to do so.

Actively understanding U.S. laws and regulations, from customs regulations and rules of origin to technical standards, product safety, labor, and environmental standards, is no longer an option, but a condition for survival in the world's largest market.

The role of industry associations also needs to be enhanced. As universal tariffs move to the sector-specific investigation phase, associations can become a central hub for information gathering, standardizing compliance criteria, providing early warning of risks, and supporting businesses in responding to consultation processes.

A single business finds it difficult to keep up with the rapid and complex changes in the US legal system, but a strong association can help the entire industry minimize compliance costs, avoid systemic errors, and, more importantly, protect the reputation of Vietnamese goods against allegations of tax evasion.

In short, the U.S. Supreme Court ruling is not the end of tariffs, but rather a “rearrangement” of the legal basis that the Trump administration will utilize.

For Viet Nam, the wise choice remains to take advantage of this time to engage in dialogue, proactively propose solutions to balance trade, and most importantly, do a good job domestically regarding supply chain transparency, origin of goods, and legal compliance.

If successful, Viet Nam would not only reduce the risk of being drawn into a new tariff spiral, but also have the opportunity to strengthen its position as a reliable link in the global supply chain.

Source: The Youth Online