The US-China trade war could mean trouble for Vietnam. China might seek to dump its goods on Vietnam to avoid US tariffs. And cheaper Chinese goods competing with Vietnamese goods will not benefit Vietnam’s economy.

To protect domestic companies import taxes may be necessary. No licenses should be issued if there is no guarantee that more than two thirds of the production chain would be in Vietnam. And Vietnam would have to promote free trade agreements with Europe and others to reduce its dependence on the US and China.

The trade war has already hit investors’ confidence causing them to pull out of emerging markets including Vietnam. The global supply chain is badly disrupted as a result, and the investment environment has become uncertain. The trade war brings both opportunities and challenges for Vietnam, but it is up to companies to identify the opportunities.

Since it is known which goods face sanctions, businesses should research about customers for those goods and offer them a better deal. The US-China trade war escalated in September with the US levying an additional ten per cent tariff on Chinese products. The US is set to raise the tariffs to 25 per cent in January if there is no agreement between the both sides.