Why Trump's China Tariff's are making Vietnam Insanely Rich – YouTube Dictation Transcript & Vocabulary

1.president Trump shocked the business world this week the White House imposing new tariffs aimed at China the US hit China with tariffs nobody knows more about trade than me it's 2018 and Donald Trump has just kicked off one of the biggest trade Wars the world has ever seen China and the United States went back and forth causing chaos but while all eyes were on the US behind the scenes an unlikely country was taking advantage of the chaos and using it to get insanely Rich Vietnam by 202 24 Vietnam was the third fastest growing economy in the world outpacing the likes of China the US and Singapore and in just a decade its income per person has nearly doubled this might seem strange for a country people associate with Communism but this is actually being caused by a strange phenomenon while Donald Trump was doing everything he could to bring manufacturing back to America an opportunity emerged since the start of the trade War Vietnam's exports to the US exploded increasing by nearly 500% in just 10 years this makes it one of the fastest growing manufacturing hubs on the planet and exports to America Now make up a quarter of the Vietnamese economy it has made people Rich more educated and life for the average Vietnamese better but there's a flip side Vietnam's economy is now Hostage to America and we've already seen how that goes 10 years of progress could be wiped out with a tweet so how did this country come to find itself in such a high stakes position and will it continue its meteoric rise or face an economic downfall walking around the streets of a Vietnamese city today would not seem too dissimilar to one in China it's clean modern and buzzing with life and while Vietnam's explosive growth is a recent phenomenon the reality is that for decades the country has been positioning itself to be the next great manufacturing hub for much of the 20th century the nation was defined by conflict when the Vietnam War ended in 1975 the country was in Ruins its economy shattered and infrastructure destroyed and after the war the Communist Party of Vietnam took full control of the country merging North and South Vietnam and adopting a Soviet style planned economy the government would control almost every aspect of economic life from the house you lived in to the job that you worked but perhaps unsurprisingly this tried and tested system failed to generate the post boom that the country desperately needed by 1985 most people were still bitterly poor and the average income was equivalent to only $238 us a year a decade on from the end of the war with the country on the brink of collapse something had to change and in 1986 the country took radical steps altering the course of history forever their Northern neighbor China was embarking on one of the most remarkable transformations of all time and Vietnam also wanted in under the name of the doy Moy reforms the country was transformed into a market economy following the blueprint set out by China the country would now allow and even support private Enterprise foreign investment and international trade the impact was immediate at the start of the 1990s over 60% of the country's population lived in extreme poverty but by 2010 this was just down to under 10% but the despite this success the country remained in China's Shadow it secured trade deals trained its Workforce and invested in infrastructure but it simply couldn't compete with the sheer size of China leaving little room for Vietnam to break into Global markets and for decades the country failed to really achieve its economic takeoff but that all changed in one day in 2018 when Trump started his trade War on China I guess we can now call it a trade War President Trump has been engaging in a trade trade war with China trade war between the United States and China is here it's real headlines broke a 25% tax on 50 billion doll worth of Chinese goods from semiconductors to clothing almost anything being manufactured in China would have to pay before entering the US Trump's idea was simple by imposing tariffs on Chinese Imports he would raise the cost of producing abroad encouraging us companies to bring back manufacturing home but China quickly retaliates ated placing $60 billion worth of us Goods under 10% tariffs as the conflict escalated successive rounds of tariffs grew harsher and eventually both countries were charging over 20% on average for all exports a few us manufacturers got a short-term boost but most heavily riing on Chinese Imports saw costs rise and demands fa to make matters worse the promise of bringing manufacturing jobs back to America the whole point of the trade War simply never happened in fact the Federal Reserve board found that the tariffs caused a reduction in manufacturing employment of 1.4% so why did Trump's tariffs fail to bring jobs back to America it may be down to one country Vietnam today Vietnam sends over $120 billion of goods to the United States every year and that adds up to more than a quarter of the Vietnamese economy but what's even more shocking is that since the tariffs Vietnamese exports to the US have increased nearly five times during this period the country's medium income has essentially doubled and some estimates suggest that tariffs alone created upwards of 2 and2 million new jobs transforming the country in literally a matter of years so how exactly has Vietnam been profiting from this after the US imposed tariffs on Chinese Goods companies were forced to rethink their supply chains and many considered relocating operations to avoid all the added costs but rather than going back to the US like Trump had hoped businesses found an attractive alternative in Vietnam companies like apple Intel and foxcon all begun to Pivot to the nation relocating major factories and bringing millions of dollars of investment with them Just 4 months ago SpaceX announced a12 billion doll investment plan in the country this might seem strange despite Vietnam's rapid growth America's GDP per capital is close to 22 times that of Vietnam you you think that businesses would flock to the US they have worldclass infrastructure a highly skilled Workforce and strong legal protections and for high skilled Industries like Tech and finance they do go there but Trump's tariffs weren't meant to bring back high skilled jobs instead he wanted to bring back bluecollar manufacturing jobs what he was voted in to do and in that regard the tariffs totally failed the reason is simple it's just to expensive the federal minimum wage in the US is $7.25 an hour with some states like California and New York going as high as 16 A2 Vietnam's minimum wage is 94 cents per hour which works out to less than $200 a month and for manufacturing jobs where workers wages make up a significant portion of the total cost it is simply far cheaper to be based in Vietnam than in the US since the start of the trade War American companies have been flooding into Vietnam and it's making the country insanely Rich It's Quickly becoming one of the biggest manufacturing hubs in the world and in the last decade their manufacturing output went from 50 billion to over 100 entire regions have been reshaped by the influx of foreign factories with industrial parks springing up seemingly overnight it's not just cheap labor that has made this possible far from being a bystander successive governments for decades have been working to set up the country to replace China on the world Stage IT ranks in the top half of Asia for English proficiency and every year more and more people are attending college but one of their main secrets to success has been industrial zones scattered across the country these areas act as manufacturing hubs attracting the biggest companies from around the world take Yen Fong one of the largest industrial zones in the country it stretches 80 Square km and is home to some of the world's biggest companies like apple and canon in fact located in this Zone alone is Samsung's largest phone factory accountable for over 50% of the company's Global Supply and Vietnam is showing no signs of slowing down in this either and has 563 of these industrial zones with 106 more on the way in just a few years so what actually makes these zones attractive for investors once again it's all about costs foreign investors in industrial zones don't have to pay corporate tax for the first 4 years of locating there and for 9 years after they only pay half the regular rate considering that in the United States the corporate tax rate is 21% it's no wonder that businesses are flocking to Vietnam and not only do they have to pay less tax but unlike America Vietnam is a single party State now of course this does come with some drawbacks but it also allows the government to make special cases for companies at ease in 2024 Jensen hang the CEO of Nvidia the second biggest company in the world met with president to Lam to discuss strategic collaborations in Ai and semiconductor development they pledged to make optimal conditions for the company offering to collaborate with the firm in return for substantial investment and following the meeting hang said that Vietnam would be the company's second home promising to establish AI research in data centers across the country but this isn't the whole story hidden behind this EXP exposive growth and investment is a highly controversial and often illegal practice trans shipping this is where companies produce Goods in China then ship them to Vietnam where they swap the country of origin label before shipping them off to the Final Destination the United States but how do we know this is actually happening since 2018 Chinese exports to Vietnam have increased by over 70% and the data is even more pronounced when we look at certain products electric batteries are up 350% integrated circuits up 37% and chemicals for electronics are up 57% major companies are using Vietnam as a base point to escape us China tariffs and American officials know this and aren't happy so China doesn't send us 2% they send us a much much higher level than that but it's called trans shipping and it's putting our steel mills out of business the country is desperately trying to prevent trans shipment but it's really hard to scan even one of the 11 million containers that enter the US every year and it's made even more difficult by the fact that for Vietnam this system is insanely profitable the process of trans shipping attracts enormous investment in the country's posts and shipping infrastructure bringing real business into the country and creating hundreds of thousands of jobs in the process and what's more this all increases government revenues port fees custom duties and logistical service taxes all go back into the government coffers but all of this raises an important question why Vietnam after all there are hundreds of other countries which could have become the global Center for Trans shipment the reason is that it largely comes down to the country's geography Vietnam is positioned strategically on the South China Sea a key Maritime trade Corridor through which nearly onethird of global shipment passes and thanks to the country's network of deep water ports and Logistics infrastructure it's able to outpace China shipping from Vietnam to the US West Coast can take as little as 16 days far less than the 30 days that shipping from China's Inland factories would often require and the country has also managed to secure its position in key East Asian trade agreements giving it free trade with major economies like China Japan South Korea and Australia and it's not only the US which Vietnam has lucrative trade deals with in 2020 it became the only developing economy in the world to have signed a free trade deal agreement with the EU giving it open access to one of the largest blocks in the world with all of this in mind it's easy to see why Vietnam is quickly becoming the global alternative to China but unluckily for them this success story could be cut short just as quick as it started and by the very country which made it possible today Trump is back in office and he's looking to go further than ever to prevent trans shipping rather than just taxing products from China he wants to place tariffs on All Foreign producers including Vietnam and if implemented it would be catastrophic for their economy almost a quarter of the country's economic output comes from selling to the US and the nation's biggest and fastest growing Industries like metal processing and computer manufacturing almost entirely reliant on selling to American consumers putting them under the same tariffs as China would completely remove their comparative advantage and potentially lead to an exodus of Business from The Country even a relative ly small Tariff of 20% would likely push them into recession wiping out the millions of jobs created over the past decade with all this looming the next few years will be completely pivotal for them and if Vietnam can navigate the challenges ahead by diversifying its trade strengthening its domestic Industries and reducing the Reliance on trans shipment it may cement its status as the next great Asian economic power but only time will tell whether Vietnam will continue on its current trajectory or be cut short this time as a victim rather than a victor of a global trade War