BANGKOK – Fearing retaliatory U.S. tariffs, Vietnam is turning to Europe, hosting a succession of senior figures over the next two months.
On Tuesday, President Luong Cuong met with Belgian’s monarch, King Philippe, and a business delegation, encouraging them to invest in key industries such as high tech manufacturing, renewable energy and infrastructure, state media reported. Philippe said he hoped Belgian businesses specializing in wastewater treatment, energy and rare minerals would set up shop in Vietnam.
Cuong also asked Belgium to ratify the EU-Vietnam Investment Protection Agreement, signed six years ago but still not in force because it hasn’t been ratified by a third of E.U. members.
Two more European delegations arrive next week. E.U. trade commissioner Maros Sefcovic is scheduled to be in Hanoi on April 11, ahead of a planned visit by European Commission President Ursula von der Leyen in May. Spain’s Prime Minister Pedro Sanchez is due in Vietnam from April 8-12.
Spain was the first E.U. country to elevate its relationship with Vietnam to a so-called strategic partnership, in 2009, according to Carl Thayer, emeritus professor at the University of New South Wales in Australia.
“Sanchez is expected to explore new trade and investment opportunities in renewable energies and infrastructure,” he said in a recent briefing.
Vietnam is keen for Airbus founding-member Spain to encourage the aircraft manufacturer to invest more in Vietnamese component production, maintenance facility construction and supply chain development, he said.
Liberation Day tariffs
Vietnam’s growing urge to do business with Europe comes amid the prospect of higher U.S. tariffs in retaliation for Vietnam’s record trade surplus with the United States.
Hanoi cut import duties on a range of American products on Tuesday to try to stave off President Donald Trump’s “Liberation Day” tariffs. It is also sending Deputy Prime Minister Ho Duc Phoc to Washington and New York with a business delegation to argue Vietnam’s case, according to Bloomberg, which cited people familiar with the plan.
Trump has vowed to announce new tariffs on Wednesday against an unspecified number of countries.
However, Vietnam is also preparing for the potential higher cost of exporting to the U.S. by looking to a bloc where it has a free trade agreement.
Since an EU-Vietnam free trade agreement came into force in 2020, two-way trade has risen almost 48% to US$68.4 billion last year.
And the two sides may be looking to take that relationship one step further when Ursula Von der Leyen meets Prime Minister Pham Minh Chinh next month, according to Carl Thayer. He said the E.U. and Vietnam are likely to elevate relations to a Comprehensive Strategic Partnership, putting it on a level with the U.S. and China.
Increased trade may include the resumption of Vietnamese seafood exports if Europe decides Hanoi has made progress in ending illegal, unreported and unregulated fishing. For its part, the E.U. could get access to rare earths and other minerals important for the manufacture of products such as electric vehicles.
If President Trump does get tougher with tariffs, Thayer sees a “silver lining” for both sides.
“If Trump imposes additional tariffs on Vietnam and the E.U. on April 2, Trump’s tariffs are likely to force U.S. manufacturers in Vietnam to lay off their workers due to a drop in exports to the United States,” he said.
“This will open opportunities for increased trade between Vietnam and the E.U. and E.U. investment in Vietnam where labor costs are comparatively low.”
Edited by Stephen Wright and Taejun Kang.