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Thursday, May 15, 2025 10:12:19 PM
Reality Vs Rhetoric — Let’s take Vietnam’s Trade Surplus with the US as an Example
"He is barking mad. This is from the full transcript of Time Magazine's interview with him three days ago:
You have to understand, I'm dealing with all the companies, very friendly countries. We're meeting
with China. We're doing fine with everybody. But ultimately, I've made all the deals.
Walter Schubert
Apr 8, 2025
The Trump Administration has fundamentally misunderstood Trading relationships and a perfect example of this is the country Vietnam. I’m going to use Vietnam as a perfect example of why Balanced Trade Between Vietnam and the U.S. isn’t happening anytime soon.
When people hear about trade imbalances — like how Vietnam sells way more stuff to the U.S. than it buys — they might think, “Why can’t we just fix that?” It sounds simple: Vietnam should buy more from the U.S., or the U.S. should stop buying so much from Vietnam. But in reality, it’s not that easy. In fact, the idea of quickly balancing trade between two countries — like what the Trump administration pushed for — is pretty unrealistic. Let’s break it down in plain terms.
What’s Going On With Vietnam and the U.S.?
Right now, Vietnam sells a ton of goods to the U.S. — things like clothing, electronics, and furniture. In 2024, Vietnam sold $123 billion worth of stuff to America but only bought about $30 billion in return. That’s a big gap! This is called a trade surplus for Vietnam (and a trade deficit for the U.S.), and it’s been growing for years.
Why does this happen? Well, Vietnam is really good at making affordable products that Americans want to buy. They’ve got low labor costs, lots of factories, and they’re part of global supply chains where big companies like Apple and Samsung make their products. On the other hand, Vietnam doesn’t buy as much from the U.S. because:
1. Most American goods are expensive.
2. Vietnam’s economy is smaller, and its people don’t have as much money to spend on imports.
3. A lot of what the U.S. makes (like software or financial services) isn’t something Vietnam needs or can afford.
Why Can’t We Just Balance Trade?
The Trump administration thought balanced trade was a straightforward goal: just make countries like Vietnam buy more American goods or stop selling so much to us. Sounds logical, right? But here’s why that idea doesn’t work in real life:
1. Vietnam Needs Exports to Survive
Vietnam’s economy depends on selling stuff to other countries — exports make up almost all of its GDP (93% in 2024). If they suddenly stopped exporting to the U.S., their economy would take a huge hit. Factories would shut down, people would lose jobs, and foreign companies might pull out of Vietnam altogether.
2. Vietnam Can’t Afford to Buy That Much From Us
Sure, Vietnam is buying some big-ticket items from America — like airplanes and natural gas — but it just doesn’t have enough money or demand to buy enough to balance things out. Most Vietnamese people aren’t going to start buying American-made cars or high-tech gadgets anytime soon because those products are too expensive.
3. The U.S. Doesn’t Make What Vietnam Needs
The U.S. economy is focused on services (like banking or tech) and high-end products (like airplanes or pharmaceuticals). But Vietnam mostly needs affordable goods that help its factories run — things like machinery or raw materials — which it can get cheaper from other countries like China or South Korea.
4. Global Supply Chains Are Complicated
A lot of what Vietnam sells to the U.S. isn’t even fully “Vietnamese.” For example, parts might come from China or Japan, get assembled in Vietnam, and then shipped to America. Stopping this flow would mess up global businesses that rely on these supply chains — not just in Vietnam but everywhere.
What About Tariffs?
The Trump administration thought tariffs (basically taxes on imports) could fix the problem by making Vietnamese goods more expensive for Americans to buy. In theory, this would reduce how much we import from them and encourage Americans to buy more stuff made at home.
But here’s the catch: tariffs don’t magically make people stop buying things they need or want. Instead, they just make those things more expensive for consumers and businesses in the U.S.! Even with a 46% tariff slapped on Vietnamese goods in 2025, Americans are still going to buy plenty of cheap clothes and electronics from somewhere — if not from Vietnam, then maybe from another country like Bangladesh or Mexico.
And here’s the kicker: tariffs don’t do much to increase how much a country like Vietnam buys from us because tariffs don’t change their ability to afford our products.
How Long Would It Take to Balance Trade?
If you’re wondering how long it would take for Vietnam and the U.S. to have balanced trade — where they sell as much as they buy — it’s probably decades away, if it ever happens at all. Why? Because fixing this imbalance isn’t just about tweaking some numbers and bashing them over the head with 46% tariffs; it would require massive changes:
- Vietnam would need to completely reshape its economy so it doesn’t rely so heavily on exports.
- The U.S. would need to start making more affordable products that countries like Vietnam actually want.
- Both countries would need new trade agreements and policies — and even then, global supply chains wouldn’t change overnight.
In short: balancing trade isn’t something you can just flip a switch on.
The Myth of Tariffs to Force Countries into perfect trade balance with the US.
The Trump administration’s push for balanced trade with countries like Vietnam was based on an irrational and total misunderstanding of how global trade works. It treated trade deficits as if they were inherently bad (they’re not) and assumed that strong-arm tactics like tariffs could force other countries into balance (they can’t). Trade imbalances aren’t just about one country “winning” and another “losing.” They’re a natural result of how different economies specialize in what they’re good at.
For example:
- The U.S. is great at making high-tech stuff and providing services.
- Vietnam is great at manufacturing affordable goods.
These differences are why trade exists in the first place! Trying to force perfect balance ignores these realities — and risks damaging both economies in the process.
So, What Should Happen Instead?
Rather than chasing an unrealistic goal like balanced trade, both countries should focus on making their relationship work better:
1. Vietnam Can Buy More American Goods:
This is already happening with deals for airplanes, natural gas, and agricultural products.
2. The U.S. Can Help Vietnam Grow:
Encouraging investment in higher-value industries (like semiconductors) could help reduce their reliance on low-cost exports over time.
3. Work Together on Trade Agreements:
Instead of fighting over numbers, both sides can negotiate deals that help both economies without demanding perfect balance.
Bottom Line
The notion of achieving balanced trade between Vietnam and the U.S. within the next 5 years is a total myth. It’s just not going to happen anytime soon. In fact, it will probably take decades, if ever — and guess what, in the real world that’s okay! Trade imbalances aren’t inherently bad; they reflect how different economies work together in a globalized world. The real goal should be building a strong partnership where both sides benefit — not chasing an impossible dream based on oversimplified ideas about how trade works.
https://medium.com/@walterschubert1956/reality-vs-rhetoric-lets-take-vietnam-s-trade-surplus-with-the-us-as-an-example-0cbdfdc1aade
"He is barking mad. This is from the full transcript of Time Magazine's interview with him three days ago:
You have to understand, I'm dealing with all the companies, very friendly countries. We're meeting
with China. We're doing fine with everybody. But ultimately, I've made all the deals.
Walter Schubert
Apr 8, 2025
The Trump Administration has fundamentally misunderstood Trading relationships and a perfect example of this is the country Vietnam. I’m going to use Vietnam as a perfect example of why Balanced Trade Between Vietnam and the U.S. isn’t happening anytime soon.
When people hear about trade imbalances — like how Vietnam sells way more stuff to the U.S. than it buys — they might think, “Why can’t we just fix that?” It sounds simple: Vietnam should buy more from the U.S., or the U.S. should stop buying so much from Vietnam. But in reality, it’s not that easy. In fact, the idea of quickly balancing trade between two countries — like what the Trump administration pushed for — is pretty unrealistic. Let’s break it down in plain terms.
What’s Going On With Vietnam and the U.S.?
Right now, Vietnam sells a ton of goods to the U.S. — things like clothing, electronics, and furniture. In 2024, Vietnam sold $123 billion worth of stuff to America but only bought about $30 billion in return. That’s a big gap! This is called a trade surplus for Vietnam (and a trade deficit for the U.S.), and it’s been growing for years.
Why does this happen? Well, Vietnam is really good at making affordable products that Americans want to buy. They’ve got low labor costs, lots of factories, and they’re part of global supply chains where big companies like Apple and Samsung make their products. On the other hand, Vietnam doesn’t buy as much from the U.S. because:
1. Most American goods are expensive.
2. Vietnam’s economy is smaller, and its people don’t have as much money to spend on imports.
3. A lot of what the U.S. makes (like software or financial services) isn’t something Vietnam needs or can afford.
Why Can’t We Just Balance Trade?
The Trump administration thought balanced trade was a straightforward goal: just make countries like Vietnam buy more American goods or stop selling so much to us. Sounds logical, right? But here’s why that idea doesn’t work in real life:
1. Vietnam Needs Exports to Survive
Vietnam’s economy depends on selling stuff to other countries — exports make up almost all of its GDP (93% in 2024). If they suddenly stopped exporting to the U.S., their economy would take a huge hit. Factories would shut down, people would lose jobs, and foreign companies might pull out of Vietnam altogether.
2. Vietnam Can’t Afford to Buy That Much From Us
Sure, Vietnam is buying some big-ticket items from America — like airplanes and natural gas — but it just doesn’t have enough money or demand to buy enough to balance things out. Most Vietnamese people aren’t going to start buying American-made cars or high-tech gadgets anytime soon because those products are too expensive.
3. The U.S. Doesn’t Make What Vietnam Needs
The U.S. economy is focused on services (like banking or tech) and high-end products (like airplanes or pharmaceuticals). But Vietnam mostly needs affordable goods that help its factories run — things like machinery or raw materials — which it can get cheaper from other countries like China or South Korea.
4. Global Supply Chains Are Complicated
A lot of what Vietnam sells to the U.S. isn’t even fully “Vietnamese.” For example, parts might come from China or Japan, get assembled in Vietnam, and then shipped to America. Stopping this flow would mess up global businesses that rely on these supply chains — not just in Vietnam but everywhere.
What About Tariffs?
The Trump administration thought tariffs (basically taxes on imports) could fix the problem by making Vietnamese goods more expensive for Americans to buy. In theory, this would reduce how much we import from them and encourage Americans to buy more stuff made at home.
But here’s the catch: tariffs don’t magically make people stop buying things they need or want. Instead, they just make those things more expensive for consumers and businesses in the U.S.! Even with a 46% tariff slapped on Vietnamese goods in 2025, Americans are still going to buy plenty of cheap clothes and electronics from somewhere — if not from Vietnam, then maybe from another country like Bangladesh or Mexico.
And here’s the kicker: tariffs don’t do much to increase how much a country like Vietnam buys from us because tariffs don’t change their ability to afford our products.
How Long Would It Take to Balance Trade?
If you’re wondering how long it would take for Vietnam and the U.S. to have balanced trade — where they sell as much as they buy — it’s probably decades away, if it ever happens at all. Why? Because fixing this imbalance isn’t just about tweaking some numbers and bashing them over the head with 46% tariffs; it would require massive changes:
- Vietnam would need to completely reshape its economy so it doesn’t rely so heavily on exports.
- The U.S. would need to start making more affordable products that countries like Vietnam actually want.
- Both countries would need new trade agreements and policies — and even then, global supply chains wouldn’t change overnight.
In short: balancing trade isn’t something you can just flip a switch on.
The Myth of Tariffs to Force Countries into perfect trade balance with the US.
The Trump administration’s push for balanced trade with countries like Vietnam was based on an irrational and total misunderstanding of how global trade works. It treated trade deficits as if they were inherently bad (they’re not) and assumed that strong-arm tactics like tariffs could force other countries into balance (they can’t). Trade imbalances aren’t just about one country “winning” and another “losing.” They’re a natural result of how different economies specialize in what they’re good at.
For example:
- The U.S. is great at making high-tech stuff and providing services.
- Vietnam is great at manufacturing affordable goods.
These differences are why trade exists in the first place! Trying to force perfect balance ignores these realities — and risks damaging both economies in the process.
So, What Should Happen Instead?
Rather than chasing an unrealistic goal like balanced trade, both countries should focus on making their relationship work better:
1. Vietnam Can Buy More American Goods:
This is already happening with deals for airplanes, natural gas, and agricultural products.
2. The U.S. Can Help Vietnam Grow:
Encouraging investment in higher-value industries (like semiconductors) could help reduce their reliance on low-cost exports over time.
3. Work Together on Trade Agreements:
Instead of fighting over numbers, both sides can negotiate deals that help both economies without demanding perfect balance.
Bottom Line
The notion of achieving balanced trade between Vietnam and the U.S. within the next 5 years is a total myth. It’s just not going to happen anytime soon. In fact, it will probably take decades, if ever — and guess what, in the real world that’s okay! Trade imbalances aren’t inherently bad; they reflect how different economies work together in a globalized world. The real goal should be building a strong partnership where both sides benefit — not chasing an impossible dream based on oversimplified ideas about how trade works.
https://medium.com/@walterschubert1956/reality-vs-rhetoric-lets-take-vietnam-s-trade-surplus-with-the-us-as-an-example-0cbdfdc1aade
It was Plato who said, “He, O men, is the wisest, who like Socrates, knows that his wisdom is in truth worth nothing”
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