Trade war is a phenomenon in which two or more countries increase or create tariffs or other

types of trade barriers against each other in response to opposing countries' trade barriers
(including: export licenses, import quotas, strict requirements for goods entering the country,
embargoes, trade restrictions and currency depreciation). Increased protectionism caused the
production of goods of the two countries to gradually move towards self-sufficiency. The trade
war between China and the US in 2018 began on March 22, 2018 when US President Trump
announced he would impose tariffs of $50 billion on Chinese goods under section 301 of the
Trade Act of 1974, to prevent what they see as unfair trade practices and property theft intellect.
In the event of an escalation of the trade war, China is the country with the biggest losses. U.S.
exports to China account for less than 1 percent of GDP and 8 percent of total U.S. exports.
Meanwhile, China's exports to the United States account for nearly 4 percent of GDP, to 20
percent of the country's export value. Value added from exports to the US accounts for 3% of
China's GDP. Chinese staples such as machinery, electronics, furniture and plastic products have
been hit with U.S. tariffs. Those key products already account for 40 percent of China's exports
to the United States. Meanwhile, US goods imported into China are greatly damaged by tariffs
including machinery and electronic components, in addition to aircraft equipment. Although
many U.S. companies are investing in China, if trade tensions are not resolved, China will suffer
a major direct economic impact on the United States.
The trade war will not only affect the world's top two economies such as the US and China, a
series of Asian countries will also be affected by this trade war. DBS's analysis report shows that
South Korea, Malaysia, Taiwan and Singapore will also be the countries in Asia most affected by
the US-China trade war. South Korea's GDP growth could lose 0.4 percent in 2018, while
Malaysia and Taiwan's GDP growth could lose 0.6 percent and Singapore's 0.8 percent, and the
impact could intensify in the following years. The Peterson Institute for International Economics
points out that nearly 2/3 of U.S. imports from China come from foreign-invested companies. So
even though U.S. import tariffs are aimed at China, there is still an impact on those companies.
Relying on foreign capital inflows into China, the most influential countries are Japan and South
Korea
According to WTO data, in 2017, total exports of goods increased by 11% to $17.2 trillion.
Ballpark estimates that for every $100 billion of goods that will be affected by import tariffs,
global trade will fall by 0.5% and will result in a 0.1% loss in global growth. Inflation will also
increase by 0.1%-0.3%, excluding exchange rate fluctuations.
In the past, China and Mexico were fierce competitors for the US market, but after the
emergence of the US-China trade war, Mexico became a country with potential for production
and development: low labor costs, close proximity to the US and benefits from the US-Mexico-
Canada Free Trade Agreement (USMCA). Mexico is a global hub for auto plants such as Ford
and Stellantis and cars are Mexico's main exports. Free trade agreements like the USMCA help
companies in the U.S., Mexico and Canada face fewer trade barriers in the North American
market. The U.S. has raised tariffs on imports from China, making Chinese goods more
expensive. While Mexico can export auto parts to the U.S., Chinese companies can use Mexico
as a route to avoid U.S. tariffs on Chinese goods.
Currently, Vietnam is the country whose economy has benefited the most in the US-China trade
war. Vietnam has the advantage of low labor costs, a stable political situation, many signed trade
agreements and a favorable geographical location for maritime routes. In terms of import and
export: Vietnam's exports to the US may increase, because US businesses always apply Chinese
import policies, when China encounters difficulties, Vietnam can replace China's position, this is
a good opportunity for Vietnam to dominate market share. However, in the first round of tariffs
(6 July) the items subject to tariffs were aircraft, batteries, flat screens, medical equipment and
weapons. That is not Vietnam's export strength, but in the second round of tariffs (17
September), items such as Internet technology products, electronic devices, consumer goods such
as furniture, lighting products, tires, chemicals, plastics, bicycles ... These are products that
Vietnam has export strengths. Therefore, the opportunity to export to the US market will be
higher. Countries that are competitors to China (including Vietnam) in the US market will be the
beneficiaries because goods are more competitive than Chinese goods. Vietnam benefits from
more sales opportunities to the US. In terms of exchange rate, USD retains its value so it does
not greatly affect the VND exchange rate although VND increases slightly. However, the yuan
fell continuously and may fall deeper, which may adversely affect Vietnam's import-export
turnover with China.
Despite being a beneficiary of the US-China trade war, Vietnam's economy still faces risks. If
Vietnam is mixed with China in this trade war, the situation will be quite difficult. For example,
the U.S. could impose anti-dumping duties on Vietnamese steel products allegedly originating
from China, which could affect other goods. Vietnam has not been recognized as a market
economy by the US. In terms of import and export, when there is a trade war, Chinese
enterprises will export more strongly to other markets, including Vietnam. This will create great
difficulties for the activities of Vietnamese enterprises, because Chinese products are always
highly competitive because of the price and variety of products. Vietnam's trade deficit with
China will tend to increase.