October 12, 2020

United States Launches Currency Investigation Against Vietnam

On Friday, October 2, the Office of the U.S. Trade Representative (USTR) announced that it was commencing an investigation of Vietnam’s currency practices. The news comes two months after the U.S. Department of the Treasury determined that Vietnam took actions that led to its currency being depressed in 2019.

In a statement, the USTR said it will look into Vietnam’s acts, policies, and practices related to the import and use of timber that is illegally harvested or traded, and will investigate Vietnam’s “acts, policies, and practices that may contribute to the undervaluation of its currency and the resultant harm caused to U.S. commerce.”

The investigation could take several months and, if the United States finds evidence of currency manipulation, could result in new tariffs on products from Vietnam.

As The Wall Street Journal explained, “Imports from Vietnam have grown rapidly in recent years, rising from $14.9 billion a decade ago to $66.6 billion last year” and the country “has been a popular destination for manufacturers looking to move out of China, either to avoid tariffs and other tensions between the U.S. and China or to seek lower labor costs.” Additionally, the South China Morning Post noted, “Vietnam’s trade surplus with the US reached record levels in August as firms moved supply chains from China to avoid trade war tariffs.”