The U.S. government agreed this week to give another coast guard vessel to Vietnam so the Southeast Asian country can increase its defense against China. But behind that move, Vietnam and the United States are struggling over a growing trade deficit that has alarmed U.S. officials.

The U.S. government has complained since June that Americans buy more Vietnamese-produced goods compared to what Vietnamese consumers take from the United States.

Vietnam relies heavily on export manufacturing for its economic growth of more than 6% per year. The deficit reached about $40 billion in 2018, which the U.S. Census Bureau calls the fifth largest between the United States and another country.

The diversion of export manufacturing from China, now saddled by U.S. tariffs, to Vietnam particularly alarms Washington, analysts say.

œThe concern from the Vietnamese side is that the U.S. could say, ˜OK, we™re going to put tariffs on exports from Vietnam.™ That™s the fear, said Rajiv Biswas, Asia-Pacific chief economist at market research firm IHS Markit.

œBut I think they could avoid that kind of risk by undertaking some substantial purchases of big-ticket capital goods from the U.S., he said.

Vietnamese leaders are looking for ways to satisfy the U.S. government and avoid another protracted dispute such as the one Trump launched against China in early 2018, country analysts say.

Source : VOA