Vietnam garment exports surge on US-China trade war

The U.S. has already imposed tariffs on $250 billion worth of Chinese goods, and China has responded with retaliatory duties on $110 billion worth of U.S. goods.

Garments, Vietnam’s second largest export-earner after smartphones, are not yet subject to U.S. tariffs, although some manufacturers have sought to move at least some production to the Southeast Asian country, anticipating potential penalties.

“We are seeing more and more orders coming in, especially from the United States,” Vu Duc Giang, chairman of Vietnam Textile & Apparel Association, told Reuters.

Garment exports to the U.S. rose 12 percent in the January-October period to $10.5 billion, while exports to China surged 40 percent to $1.1 billion, according to a government statement released on Thursday.

Ngo Quang Thoa, chairman of Swimax International Joint Stock Co, a contractor which produces swimwear and underwear products for U.S. companies such as Target and Express, said he had received a large increase in orders from the U.S. since January.

“This is because of the trade war between the U.S. and China,” said Thoa, who added that he expected to see his exports to the U.S. increase by up to 20 percent by the end of the year.

“Some U.S. clients are already making strategic adjustments to their business plans to diversify their supplies, even though Trump hasn’t targeted Chinese garments in the tariff war yet,” he said.

Vietnam is home to over 6,000 textile and garment factories which employ around three million people, Thursday’s government statement said.

Giang, chairman of Vietnam Textile & Apparel Association, told Reuters those figures were likely to grow, thanks to a plethora of Vietnamese free-trade agreements, and not just because of the U.S.-China trade spat.

Vietnam has signed around a dozen free-trade agreements that will remove or reduce taxes on several imports and exports.

Foreign investors poured in $2 billion in Vietnam’s garment and textile production in the first eight months of this year, Giang said.

Most investors were from Japan, South Korea, Taiwan and China, he added.

“They have been upping their investment in Vietnam for years,” said Giang.