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Vietnam most exposed to US duties in Southeast Asia, UNDP

says

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Southeast Asia worst impacted region in Asia, UNDP says

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Vietnam's footwear exports fell sharply in August, data

show

By Francesco Guarascio

HANOI, Sept 22 (Reuters) - U.S. tariffs imposed in

August risk slashing up to one-fifth of Vietnam's exports to the

United States, making it the worst-hit country in Southeast

Asia, according to estimates by the United Nations Development

Programme.

Vietnam was the world's sixth-largest exporter to America

last year with $136.5 billion worth of shipped goods, U.S. trade

data show. Those goods are largely produced in factories run by

U.S. and foreign multinational companies or their suppliers.

In a worst-case scenario of very high tariff-driven U.S.

inflation, the 20% duties levied on Vietnamese goods could cause

its U.S. exports to fall "over time by more than 25 billion

dollars, nearly one fifth of the yearly total," Philip

Schellekens, UNDP chief economist for the Asia-Pacific region,

told Reuters.

Vietnam's finance and industry ministries did not

immediately reply to requests for comment.

The first comprehensive Vietnamese data released since

tariffs took effect on August 7 show Vietnam's exports to the

United States, its biggest market, fell by 2% in August from

July, with a 5.5% drop for footwear, of which Vietnam is the

world's second-largest supplier, according to the customs

department. That followed a surge in exports before tariffs.

The World Bank revised down Vietnam's growth forecasts for

this year after the U.S. tariffs took effect.

Nike ( NKE ), Adidas and Puma, which

produce a large part of their global output of shoes through

suppliers in Vietnam, declined to comment.

VIETNAM HIT HARDEST

The 19.2% potential fall in Vietnamese exports to America

would be nearly twice as high as the average 9.7% possible drop

in exports from Southeast Asia, the most impacted region in the

continent and a major industrial hub, according to a UNDP report

released last week, one of the first public estimates of the hit

on trade flows since the tariffs took effect.

"No country in Southeast Asia is more exposed to U.S. tariff

hikes than Vietnam," said Schellekens, noting only China in East

Asia would be hit harder in dollar terms.

Among large Southeast Asian nations, Thailand's U.S. exports

could fall 12.7%, Malaysia's 10.4% and Indonesia's 6.4%, the

UNDP report said.

The estimated fall of U.S. exports would shave roughly 5%

from Vietnam's Gross Domestic Product, although the tariff

impact could take years to fully materialise, and was likely to

be mitigated by exporters' absorption of some costs, Vietnam's

diversification to other regions and bigger domestic spending.

The UNDP estimates are based on a scenario in which duties

would be entirely passed through to U.S. consumers, damping

demand, which so far has not happened as the impact on U.S.

inflation has been moderate.

The UNDP did not take into account either the possible

effect of 40% tariffs on goods transhipped through Vietnam,

which could have a devastating impact if Washington decided to

set strict limits on foreign components used in exported items,

given Vietnam's goods highly rely on Chinese input.

The UNDP data did not factor in current tariff exemptions on

consumer electronics which account for about 28% of Vietnam's

total exports to America. However, even if Washington upheld

those waivers, Vietnam's U.S. exports could still fall by $18

billion, Schellekens said.