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Vietnam is in talks with Washington to avoid punitive

tariffs

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Exports to US and imports from China jump in May

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In April, only China and EU had surpluses higher than

Vietnam

(Recasts and writes through, changes media packaging

information)

By Francesco Guarascio, Khanh Vu and Phuong Nguyen

HANOI, June 6 (Reuters) - Vietnam's trade surplus with

the U.S. expanded sharply in May as exports swelled and its

imports from China also jumped, exacerbating sore points with

Washington that could hurt Hanoi's efforts to avoid crippling

tariffs.

Separate trade data from the U.S. also showed Vietnam's

surplus overtook Mexico's in April, lagging only China and the

European Union.

U.S. President Donald Trump has vowed to bring down the U.S.

trade deficit and the Southeast Asian country faces one of his

highest "reciprocal" tariffs at 46% if a deal cannot be

negotiated before a pause on the levies ends in early July.

Despite Hanoi's efforts and pledges to meet Washington's

demands, the surplus keeps growing, particularly as exporters

rush to get their goods to the U.S. before the tariffs go into

effect.

The new figures "may put some clouds in the sky of these

negotiations and put pressure on Vietnam to make additional

concessions to reach an agreement," said Leif Schneider, vice

chairman of the European Chamber of Commerce in Vietnam's legal

sector committee.

The surplus with the United States surged to $12.2 billion

in May, up nearly 42% from a year earlier and 17% higher than

April, Vietnamese government data showed on Friday. Exports to

the U.S. also climbed roughly 42% from a year earlier to a

post-pandemic high of $13.8 billion.

That stands in contrast to signs that other countries are

reining in their exports to the United States with the U.S.

trade deficit narrowing sharply in April.

Schneider noted that while Vietnam's spike in exports was

largely due to front-loading ahead of possible tariffs, and

represents a short-term inflation of the surplus, Vietnam is in

a particularly hard spot because of its limited imports from the

United States.

In the first five months of the year, the surplus hit nearly

$50 billion, up 28.5% and putting Vietnam on track to exceed

last year's record surplus.

The country's imports from China also posted a post-pandemic

record of $16.2 billion in May, up 21% from a year earlier.

Vietnam is home to large manufacturing operations of U.S.

multinationals such as Apple ( AAPL ), Intel ( INTC ) and Nike ( NKE )

, and it also hosts numerous Chinese companies, often

suppliers to U.S. firms.

U.S. officials have repeatedly accused Vietnam of being used

as a waypoint for Chinese goods destined for the United States.

They allege that some goods have "Made in Vietnam" labels

despite having received no or insufficient added value in the

country - allowing Chinese exporters to avoid high U.S. duties

on their goods.

The U.S. has sent a "long" list of "tough" requests to

Vietnam in its tariff negotiations, including demands that could

force the country to cut its reliance on Chinese industrial

goods imports, two people briefed about the matter have said.

Under U.S. pressure, Hanoi has launched a crackdown on

illegal transshipments of goods, mostly from China. It has also

repeatedly shown its willingness to reduce non-tariff barriers

and to import more U.S. goods, including U.S. planes, farm

products and energy, although no purchase contracts have been

announced yet.

Vietnam's overall trade figures with the world showed

exports in May rose 17% from a year earlier to $39.6 billion,

while imports were up 14% at $39 billion.

Separate government data also out on Friday showed

industrial production in May shot up 9.4% from a year earlier,

while consumer prices rose 3.24% and retail sales were up

10.2%.

Foreign investment inflows for January-May climbed 7.9% to

$8.9 billion. Foreign investment pledges over the period soared

51.2% to $18.4 billion.