The Trump administration has presented Vietnam with a a “long” list of “tough” demands in tariff negotiations, including measures that could compel Vietnam to reduce its dependence on Chinese industrial goods imports, according to two sources familiar with the discussions, as reported by Reuters.
Reuters:
Washington wants Vietnam-based factories to reduce their use of materials and components from China and is asking the country to control more carefully its production and supply chains, one of the people briefed on the talks said, without elaborating on whether quantitative targets were included… The list was sent to Hanoi at the end of May after the conclusion of a second round of talks with Washington aimed at avoiding 46% “reciprocal” tariffs on imports from Vietnam.
Reuters reported on Monday that the Trump administration wants countries to provide their best offers on trade negotiations by Wednesday, citing a draft letter to negotiating partners.
U.S. officials have long accused Vietnam of being used as a waypoint for Chinese goods destined for the United States. At times, according to the allegations, goods had “Made in Vietnam” labels despite having received no or insufficient added value in the country – allowing Chinese exporters to avoid high U.S. duties on their goods.
Aware of the U.S. criticism, Hanoi has launched a crackdown on illegal transhipment of goods. The effect has yet to be seen in trade flows, however, as exports to the United States and imports from China both reached a record high in April, according to the latest data.
Vietnam has also repeatedly shown its willingness to reduce non-tariff barriers and to import more U.S. goods, in line with long-standing requests from Washington.
MacDailyNews Take: Apple’s production in Vietnam has seen significant growth over the past few years, driven by the company’s belated efforts to diversify its supply chain away from China due to trade tensions, supply chain risks, and Vietnam’s favorable manufacturing environment.
In 2016, Apple had 18 production facilities in Vietnam, ranking fourth in Southeast Asia behind Malaysia (23), Thailand (19), and the Philippines (19). By 2022, this number increased to 27 facilities, making Vietnam the second-largest hub for Apple suppliers in the region, behind Thailand (28).
As of April 2024, Apple’s supplier count in Vietnam grew from 27 to 35, establishing Vietnam as Apple’s largest manufacturing base in Southeast Asia and the fourth-largest globally.
Foxconn, Apple’s primary assembler, has invested heavily in the country, including a $300 million expansion in 2022 and a total of $4 billion across five localities, employing around 80,000 workers.
Vietnam has transitioned from producing simpler products like AirPods (started in 2020) to more complex devices like iPads and MacBooks. By 2023, Apple began manufacturing MacBooks in Vietnam, with production scaling up significantly.
Vietnam now produces a significant portion of Apple’s products, including iPads, MacBooks, Mac minis, HomePods, Apple Watches, and AirPods.
By the end of 2025, Vietnam is expected to account for:
• 20% of global iPad production
• 20% of Apple Watch production
• 5% of MacBook production
• 65% of AirPod production
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