‘Squeezed Between Two Giants'

Vietnam once looked like one of the few winners in the U.S.-China trade war. Now it’s bracing for trouble

- JOHN BOUDREAU and NGUYEN DIEU TU UYEN

Quach Ngoc Thien should be basking in good times. His fabric- dyeing company is woven tightly into the global garment supply chain. Located in bustling Ho Chi Minh City, Hong Le Trading Co. is emblematic of the promise of a rising Vietnam, which enjoys one of the world’s fastest-growing economies. And now it’s expanding, creating a unit to produce fabric to be turned into T-shirts and dresses for Walmart, Nordstrom, and other U.S. retailers.

Yet Thien sleeps fitfully. Every morning he reaches for his iPhone to scan news from faraway capitals that could put his livelihood and that of his 80 workers in jeopardy. That’s because Vietnam again finds its destiny shaped by the clash of great powers. The country, the bloodiest battlefield of the Cold War five decades ago, is at the nexus of the latest superpower confrontation—the economic rivalry between the U.S. and China.

To keep its export-powered growth story going, Vietnam needs unfettered access to the market of its former enemy, America, whose shoppers snap up Nike shoes made in the country’s south and tap away on Samsung smartphones assembled in giant plants just north of Hanoi. Equally crucial are imports—from yarn for making shirts and pants to chemicals and machines for assembly lines—from its fellow communist state and ostensible friend, China.

Early on in the U.S.-China trade war, Vietnam was shaping up as one of the world’s few winners. Investments flowed in and products shipped out of its busy ports in ever-increasing numbers. This bounty had unforeseen consequences, though: A growing trade surplus with the U.S. exposed Vietnam to the sort of tariffs the Trump administration had imposed on China. The duplicitous flow of Chinese products such as aluminum and plywood, rerouted south across the border and falsely labeled “Made in Vietnam” to avoid U.S. duties, is further straining Hanoi’s relations with Washington.