Trade barrier

The United States has implemented trade tarrifs using different percentage of duties for goods being imported from other countries.  Tariffs are aimed at restricting trade by increasing the price of goods which makes them more expensive to local consumers, therefore, acting as barriers to trade (Baldwin, 2016).  Vietnam is one of the countries that encounter the highest duties to import goods into United States at an average rate of 7.5 percent as per 2015.  This has made it difficult for Vietnam to export goods such as clothing manufactured local at competitive prices, considering that countries such as Mexico would import the same products without pay such duties (Fahey, 2016).

 While on average, imported goods face 2 percent in form of U.S tariffs, the apparel and textile products are subjected to an 11.1 percent rate.  With its large textile industry , the barriers denies Vietnam an opportunity to expand its textile  and apparel market reach which in turn hinders economic growth and especially in this industry. In comparison, US exports to Vietnam continue to expand which has lead to a wide trade deficit between the two countries which stood at above $31 billion in 2016.  This indicates a lost economic opportunity for Vietnam informed by the tariffs (United States Census, 2017).

 The removal of barriers by developed countries would lead to access of markets by developing countries and this would boost industrial and economic development (Hayakawa & Kimura, 2016). The economic effect would be felt in the economies if the developing countries would enter into preferential trade and make them binding (Baldwin, 2016).  Liberalization of the developed economies would give countries like Vietnam to develop their manufacturing industries, improve trade and hence, economic growth.

References

Hayakawa, K., Ito, T., & Kimura, F. (2016). Trade Creation Effects of Regional Trade Agreements: Tariff Reduction versus Non‐tariff Barrier Removal. Review of Development Economics, 20(1), 317-326.

Baldwin, R. (2016). The World Trade Organization and the future of multilateralism. The Journal of Economic Perspectives, 30(1), 95-115.

United States Census ,(2017).Trade in Goods with Vietnam. Retrieved from: https://www.census.gov/foreign-trade/balance/c5520.html