A couple of weeks ago, I was discussing the possible impact of tariffs on Vietnam. If you recall, the managers of VinaCapital Vietnam Opportunity Fund (VOF) were fairly sanguine about the prospect, reasoning that the US would see Vietnam as an ally in the region and recognise that it was making an effort to address the sizeable trade imbalance, while suggesting Trump’s family interests would outweigh other concerns.
In the event, Vietnam has been hit with some of the highest tariffs of any nation. The rationale for that is as idiotic as the idea that the US will be better off as a result. It appears as though Vietnam’s 46% tariff rate just represents half the percentage trade imbalance.
Unsurprisingly, Vietnam-focused investment trusts and Vietnamese companies have seen sharp falls in their share prices. But given the illogicality of the size of the tariffs, the unpredictability of the US regime, and the uncertain response to the US from the nations that it has targeted, it feels impossible to gauge whether the reaction is justified. VOF’s managers noted that the falls were indiscriminate, affecting domestically-focused companies and exporters alike. Hardest hit amongst Vietnamese trusts has been Vietnam Holding (VNH), which fell by 15% in the wake of the tariffs (to close of play on Friday, but markets are still falling hard today).
China was expected to be a target but even here the scale of the tariffs (an extra 34%) was unexpected. There will be a knock-on effect, but… read more here