U.S. Trade Agency Drops Tariff Threat Against Vietnam Over Monetary Practices

WASHINGTON, July 23 (Reuters) – The Office of the U.S. Trade Representative on Friday said it had determined no tariff action against Vietnam was warranted after its central bank agreed with the U.S. Treasury not to manipulate its currency for an export advantage.

In a statement, the USTR said it found that the agreement between the U.S. Treasury and the State Bank of Vietnam earlier this week “provides a satisfactory resolution to the matter under investigation and, by therefore, no commercial action is warranted at this time.

The State Bank of Vietnam pledged on Monday in an agreement with Treasury Secretary Janet Yellen to refrain from “competitive devaluation” of its dong currency and to make its monetary and exchange rate policies more transparent. Read more

The deal follows months of US pressure on Vietnam over its monetary practices and the growing US trade surplus. The Trump administration in its final weeks had declared Vietnam a currency manipulator and threatened to impose punitive tariffs on imports from Vietnam because of its monetary practices.

The USTR’s determination, described in a Federal Register Notice, relates only to its Section 301 investigation into Vietnam’s monetary practices. This does not affect a separate Section 301 investigation into Vietnam’s use of illegally harvested or traded timber that could result in tariffs on furniture and other timber products imported from Vietnam.

“American workers and businesses are stronger when our partners value their currencies fairly and compete on an equal footing,” US Trade Representative Katherine Tai said in a statement.

“Going forward, in coordination with the Treasury, we will work with Vietnam to ensure implementation, and we will continue to review the monetary practices of other major trading partners,” Tai added.

Vietnam hailed the USTR’s decision to take no action, its Foreign Minister Bui Thanh Son said.

“Constructive efforts and goodwill help to resolve outstanding issues and help build a better and stronger partnership,” Son said on Twitter on Saturday.

The Vietnamese dong closed at 23,005 to the dollar on Friday, up from 23,191 on October 2, 2020, the day the USTR launched its currency investigation.

Reporting by David Lawder; Editing by Leslie Adler and Diane Craft

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