China is obstacle to US-Vietnam trade deal

Among the countries that were hit with steep tariffs, Vietnam was one of the most willing to meet the Trump government's demands, but China is a sticking point, write Alexandra Stevenson and Tung Ngo from Ho Chi Minh City

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China's giant logistics machine was humming inside rows of metal warehouses near Ho Chi Minh City in southern Vietnam this month.

Hundreds of workers packed cosmetics, clothes and shoes for Shein, the Chinese fast-fashion retailer. Recruiters needing to fill hundreds more jobs were interviewing candidates outside.

At another industrial park, owned by the supply chain arm of Alibaba, the Chinese e-commerce giant, trucks drove in and out at a steady clip.

This kind of activity, powered by Chinese money, has brought jobs to Vietnam. It is one of the forces that have made Vietnam a thriving destination for companies around the world looking for alternatives to China's factories.

But as President Trump's trade war is turning supply chains upside down, China's role is emerging as the biggest obstacle for Vietnam as it tries to avoid a 46% tariff.

Vietnamese officials are rushing to secure a deal before a 90-day pause on the new tariffs ends in early July. They met with administration officials in Washington this week for a second round of talks. The talks will resume next month, Vietnamese officials said.

The Trump administration wants Vietnam to do more to crack down on companies that are rerouting goods from China to Vietnam to avoid tariffs, a practice known as transshipment.

But the administration is also taking a view of the issue that goes beyond the usual definition of transshipment as it tries to wean the American economy off its dependence on Chinese imports. That puts countries that rely on China to make goods they export under heavy pressure.

For Vietnam, the challenge is proving that what it sends to the United States was made in Vietnam and not in China. In a sign of the awkward position it finds itself in, Vietnam was recently called "a colony of China" by Peter Navarro, a top trade adviser to Trump.

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