Vietnam struck a major trade deal with America to dodge massive taxes on its exports. The country faced a crushing 46 percent tariff that would have destroyed its economy. Trump agreed to cut the punishment down to just 20 percent after Vietnam promised to buy more American cars. The deal saves Vietnamese factories from going under next week. Experts say this shows how Trump plans to handle other Asian countries.
The agreement comes with a nasty catch for goods passing through Vietnam from China. America will slap a 40 percent tax on products that Chinese companies try to sneak through Vietnamese ports. Washington claims Vietnam helps China cheat the system by putting fake labels on Chinese goods. Raw materials from China keep Vietnamese factories running every day. Analysts worry this could start a nasty fight between America and China.
Stock prices jumped when news of the deal first broke out. Clothing companies and sports gear makers saw their shares climb higher. The celebration ended fast when investors learned about the harsh rules for Chinese goods. Companies that use Chinese parts might get hit even when they follow all the rules. Vietnam could lose one quarter of everything it sells to America over the next few years.
China might strike back against Vietnam for making this deal. Beijing warned it would punish countries that hurt Chinese business interests. The new tariff rules on transshipped goods could fall under that threat. Any revenge from China would crush Vietnam's small economy.
The agreement comes with a nasty catch for goods passing through Vietnam from China. America will slap a 40 percent tax on products that Chinese companies try to sneak through Vietnamese ports. Washington claims Vietnam helps China cheat the system by putting fake labels on Chinese goods. Raw materials from China keep Vietnamese factories running every day. Analysts worry this could start a nasty fight between America and China.
Stock prices jumped when news of the deal first broke out. Clothing companies and sports gear makers saw their shares climb higher. The celebration ended fast when investors learned about the harsh rules for Chinese goods. Companies that use Chinese parts might get hit even when they follow all the rules. Vietnam could lose one quarter of everything it sells to America over the next few years.
China might strike back against Vietnam for making this deal. Beijing warned it would punish countries that hurt Chinese business interests. The new tariff rules on transshipped goods could fall under that threat. Any revenge from China would crush Vietnam's small economy.
