Vietnam Faces 46% Tariffs Unless It Cuts Chinese Tech Use

Vietnam is under significant pressure from the United States to reduce its reliance on Chinese technology in the production of electronics destined for American markets. This push is part of a broader U.S. strategy to reshape global tech supply chains away from China, with Vietnam serving as a critical pivot point in this effort. American trade officials have been urging Vietnamese authorities to limit the use of Chinese components in high-tech goods such as smartphones, virtual reality headsets, and computing devices. These products are assembled in Vietnam for major companies like Apple, Samsung, Meta, and Google, but they often incorporate Chinese-made parts.

The U.S. has warned Vietnam of imposing steep tariffs, potentially as high as 46%, on its exports if the country does not comply with these new expectations. The negotiations are urgent, with a July 8 deadline looming. This deadline adds pressure to discussions that involve both trade and national security considerations. Vietnamese firms have indicated a willingness to adapt but have cautioned that such a transition would require substantial time and capital. Currently, China remains the primary supplier of essential components for Vietnam's tech assembly industry.

Last year, Vietnam imported approximately $44 billion worth of electronics and parts from China, while exporting $33 billion in tech goods to the United States. The U.S. is also pushing Vietnam to crack down on the practice of falsely labeling goods made in China as "Made in Vietnam" to circumvent tariffs, a practice that Washington views as undermining its trade policies. This issue adds another layer of complexity to the ongoing negotiations between the two countries.

Vietnam is not the only Asian manufacturing hub facing such pressures. Taiwan has recently implemented a comprehensive export ban targeting Chinese AI and semiconductor firms, including Huawei Technologies Co. and Semiconductor Manufacturing International Corp. (SMIC). This ban, announced by Taiwan’s International Trade Administration, restricts the supply of critical chipmaking technologies to these companies. The move aligns with U.S. export control efforts and is part of new domestic laws aimed at countering Beijing's influence operations. The restrictions specifically block Taiwanese companies from exporting chip fabrication tools, manufacturing equipment, and essential materials to Huawei, SMIC, and their subsidiaries, requiring government approval for any such exports.

Without access to Taiwanese parts and tools, Huawei and SMIC may face challenges in maintaining their momentum in advanced chip development. This could potentially hinder their efforts to compete with global chip leaders. The impact of these restrictions is yet to be fully realized, but they represent a significant shift in the tech supply chain dynamics. With negotiations still ongoing, all eyes are on a potential diplomatic breakthrough. Vietnamese Communist Party chief To Lam is expected to meet with U.S. President Donald Trump in Washington later this month. While no official date has been confirmed, trade, tech, and tariffs are expected to be the dominant topics of discussion.