In tariff negotiations, the US is pressuring Vietnam to employ less Chinese technology in electronics that are built domestically and then shipped to the US.

In an effort to increase the supply of Vietnamese parts, the Southeast Asian country has been holding meetings with local companies.

While the companies have expressed a readiness to work together, they have also cautioned that doing so will require time and technology.

With punishing tariffs of 46 percent, the Trump administration has threatened to upend Vietnam's export-oriented growth model and severely restrict access to the country's key market for goods created in Vietnam.

According to a second source, the ultimate goal is to accelerate the United States' decoupling from Chinese high-tech while boosting Vietnam's industrial capacity. Reports cited virtual reality devices as an example of products made in Vietnam that rely too heavily on Chinese technology.

The date and extent of a potential agreement are still unknown as the July 8 deadline set by the US for the tariffs to go into effect draws closer.

 

Roughly 30 percent of China's overall exports to Vietnam last year were in the form of electronics components, laptops, and phones, totaling roughly $44 billion. Vietnam accounted for 28 percent of all exports to the United States, with $33 billion worth of electronic goods exported to the country. Vietnam's customs data shows that both flows are increasing this year.

The ministry says that although the third round of negotiations in Washington last week ended with some progress, there are still important concerns that need to be addressed.

Local businesses that attended the trade ministry's recent discussions indicated that they were generally open to adapting, but several cautioned that sudden changes "would destroy business."

Vietnam is still a long way from matching China's sophisticated supply chains and lower prices, but it has been gradually building an industrial ecosystem with local suppliers.

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Vietnam's fragile relationship with China, a significant investor in its neighbor in Southeast Asia and a security concern, could be harmed by abrupt changes to current norms.