Talking Tariffs: Vietnam, Communism, and Trump's New Trade Agreement

International trade is something not many of us can talk intelligently about, but it affects us every day. Gasoline, oil, medicines, computer chips, clothing, everything that affects our day-to-day life is affected by global events, trade agreements, and, yes, tariffs. That's one of the reasons the tariff's President Trump announced when he took office offended so many: they threatened to drive costs up on everyday Americans' everyday goods. Their intended effect? Force other countries to the negotiating table to broker new trade agreements that favour the United States while potentially improving the economic situation of the target country.

These tariffs were (and continue to be, as of this writing) a game of economic chicken. The world's most powerful economy was applying pressure on everyone else's, both local and regional, and one side would have to break. Either the target country would break from the economic impact or the United States would break from the pressure on its own citizens. The calculation was, however, always weighted in the United States' favour. The American economy would far outlast any other in the world before the pressures force the United States to capitulate. Canada, Mexico, France, Australia, Saudi Arabia, none of them could afford to play the game of chicken until the end, because their countries would be in total economic ruin and collapse.

My friend referred to it as the "lugnut rule." On the highway, motorcycles, cars, trucks, and tractor trailers share the roadway, but they are not equal on it. If one car decides to play a game with the others, it has to do so in a way that will see it come out on top with the least amount of damage. In a wreck, a passenger car will come out better than a motorcycle, a tractor trailer better than a car, and a tank better than anything else (believe me, I've seen it). So, what's the "lugnut rule?" Simple: the vehicle with the most lugnuts holding its wheels to the axel almost always comes out better in a wreck. As high speed and cool as that motorcycle is, a giant tractor trailer with its dozen wheels of a dozen lugnuts will ultimately win in a head-to-head confrontation. The same is true of Trump's tariff policy.

So why all this talk of tariffs and lugnuts from a world traveller? Well, this week, President Trump and the leader of Vietnam came to a trade arrangement that demolished the pre-existing trade regimen and instituted a new system. The reciprocal tariffs President Trump placed on Vietnam were reportedly 90% on all goods, something Vietnam could not sustain for long as companies sought alternatives to keep costs down. Vietnam was a 150cc motorbike up against a high-powered tractor trailer.

What was the old regimen, though? Most people have no cause to know, but I got acquainted with it during my time in Hanoi while perusing knock-off sporting gear shops. I was appalled to find brands like Under Armour, Adidas, North Face, and Columbia going for just 10 USD a shirt or 15 USD a bag. Of course, they were all fake (although that is not to put down the quality, which was there). A true Under Armour shirt at a Western store cost 40 USD or more! The difference was astonishing, and it seemed downright exploitative of tourists and locals alike for the "real deal" to cost so much. Was it a status thing? A communist propaganda tool? After all, much of our sports clothing is made in Vietnam, so it seemed to me the prices should have been lower.

The answer, of course, was a combination of politics and economics. Vietnam allowed foreign businesses to manufacture their products in Vietnam at a discounted tax rate provided 100% of the products were made for export. It was a policy which brought much-needed business dollars and jobs into Vietnam, but which excluded the Vietnamese people from the fruits of their labour and American businesses from the Vietnamese commercial market (the everyday one, anyways). While unproven (but likely), leaders of the Communist Party of Vietnam were widely believed to be getting substantial kickbacks from businesses, further exacerbating the exclusion regular Vietnamese people experienced. If any company wanted to sell its authentic products inside Vietnam, it had to re-import them at a 90% tariff, thus resulting in the obscenely high costs to the very people who made them.

At the time, and to this day, I was disgusted with this policy. I wasn't disgusted with the businesses which used the legal system to lower costs, but with the Communist Part of Vietnam for allowing its people to be exploited by foreign capitalists. It was the very definition of hypocrisy. I was also disgusted with Americans who supported communist ideals back home while simultaneously decrying President Trump's tariff policy. These Americans actively supported the ideals which oppressed the Vietnamese people while opposing a system that could provide liberation to the Vietnamese working class, all while living a comfortable life in the United States with products the Vietnamese people made under their current system.

The new trade deal, which President Trump claims to have negotiated himself, is a complete overhaul. American companies and products will, allegedly, have direct access to Vietnamese markets (although that wasn't backed with a tariff percentage, so we'll see), and tariffs on Vietnam will drop to 20%. The game of economic chicken not only avoided a collision (which, admittedly, the United States initiated), but it promises to benefit the Vietnamese people by providing them access to the goods which they produce for Western consumption (hopefully at severe cost to their communist leaders that have been exploiting them all these years).

Will those effects pan out? No one really knows, but I hope so. I met many amazing Vietnamese people who talked openly about their disdain for the way their country's leadership ignores their economic hardships (far from the capital, of course). Struggling to save 1,000,000 Vietnamese Dong (just 40 USD) for a wedding in rural Vietnam while the mausoleum to Ho Chi Minh stands imposingly over the capital with its beautiful gardens, tourist-focused museums, and immaculately-dressed guards is a juxtaposition many back home can't fathom. Communism has failed everyday Vietnamese people. Maybe President Trump's capitalistic outlook, tariffs, and trade policies can help lift them up.