[Source: Reuters]

In hope of avoiding punishing U.S. tariffs, Vietnam is prepared to crack down on Chinese goods being shipped to the United States via its territory and will tighten controls on sensitive exports to China.

This is according to a person familiar with the matter and a government document seen by Reuters.

The offer, the details of which are reported by Reuters for the first time, came as senior U.S. officials, including the influential White House trade advisor Peter Navarro, raised concerns about Chinese goods being sent to America with “Made in Vietnam” labels that draw lower duties.

Vietnam has for weeks been offering sweeteners that it hoped would persuade the U.S. President Donald Trump’s administration to take a benign view of its huge trade surplus with America. Instead, it was hit with a 46% tariff as part of Trump’s “Liberation Day” salvo.

While the tariff has been suspended for 90 days, the two countries agreed to start talks after a Vietnamese deputy prime minister met with the U.S. Trade Representative on Wednesday.

Export-reliant Vietnam is hoping to get the duties reduced to a range of 22% to 28%, if not lower, according to three people with knowledge of the matter.

One of them said that U.S. officials had signalled that range was likely, during a bilateral meeting in March.

Vietnam’s trade ministry and the USTR’s office did not return a request for comment.

In announcing the start of trade talks with the U.S. on Thursday, Vietnam’s government said on its official portal it would crack down on “trade fraud.” It did not provide specifics.

Since Trump’s first term, many multi-national firms have implemented a “China plus one” policy of setting up factories in Vietnam to reduce exposure to Beijing.

The Southeast Asian nation is in a tight spot as it tries to preserve trade with the U.S., which is its largest export market and a security partner.

At the same time, Hanoi does not want to antagonize China, which is a top source of investment as well as a neighbour with which it has clashed over boundaries in the South China Sea.

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