US Pressures Vietnam To Cut Chinese Tech Dependency Amid Tariff Talks: Report

In the ongoing tariff negotiations, the United States is reportedly urging Vietnam to reduce its reliance on Chinese technology in the production of devices that are later exported to the U.S.

What Happened: The U.S. is pressuring Vietnam to decrease its use of Chinese technology in the production of devices that are later exported to the U.S. This move could significantly impact Vietnam’s export-oriented growth model, which is heavily reliant on the U.S. market, reported Reuters on Monday.

“That is part of the restructuring of supply chains and would in turn reduce U.S. dependency on Chinese components,” a source told Reuters.

The Trump administration has threatened Vietnam with steep tariffs “of up to 46%,” a move that could significantly restrict the country’s access to its main export market and disrupt its export-driven economy. The U.S. is also pressuring Vietnam to crack down on the transshipment of Chinese goods falsely labeled as “Made in Vietnam,” a practice that Vietnam is actively working to curb.

Vietnam, home to major manufacturing operations of tech giants like Apple Inc. AAPL and Samsung Electronics Co. Ltd. SSNLF, has been organizing meetings with local businesses to increase the supply of Vietnamese parts. While firms have shown readiness to collaborate, they have also cautioned that they would require time as well as technology to do so.

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Why It Matters: The U.S.’s push for Vietnam to reduce its reliance on Chinese technology comes amid the ongoing trade tensions between the U.S. and China. This development also follows Chinese President Xi Jinping‘s diplomatic tour of Southeast Asia, where he urged countries like Vietnam to stand against “unilateral bullying” and uphold free and open trade.

Earlier in April, President Donald Trump revealed that Vietnam was interested in negotiations to reduce tariffs, a move that was well received by the market.

The current development, however, indicates a potential shift in Vietnam’s trade dynamics, as it navigates the demands of both the U.S. and China. Reuters also reported that Vietnam views the demands of the U.S. as “tough” and “difficult.”