US trade deficit with Vietnam tops $110 billion as weak dong boosts exports

The US trade deficit with Vietnam surpassed $110 billion in the first 11 months of 2024, the latest US figures show, as the Southeast Asian industrial hub's exports grew amid a record drop in its currency against to the dollar.

The latest reading, released on Tuesday by the US statistics agency, showed the deficit increasing by almost 18% compared to the same period a year earlier. The data confirms that the communist country has the fourth highest trade surplus with the United States, surpassed only by China, the European Union and Mexico.

Analysts see the large gap as a major risk for the export-reliant nation amid President-elect Donald Trump's threats to impose tariffs of up to 20% on all U.S. imports.

That risk has been compounded by a sharp decline in the Vietnamese dong in recent months, with the dong trading near its lowest levels against the dollar. The trend is being watched closely in Washington, as Vietnam is one of the countries under scrutiny for possible currency manipulation.

Vietnam, which counts the United States as its largest market, is home to large export-focused industrial operations of American multinationals such as Apple, Google, Nike and Intel.

The latest seasonally adjusted trade figures show that in the January-November period Vietnam accumulated a trade surplus with the United States of $111.6 billion, compared to $94.8 billion in the same period in 2023. The unadjusted data pointed to a larger gap of 113.1 billion dollars.

In November, the trade gap widened by another $11.3 billion, accelerating from October, as Vietnam's exports to the United States increased, adjusted data showed, possibly supported by the weakness of the dong.

“If the United States perceives that Vietnam is deliberately keeping the dong weak to gain an unfair trade advantage, it could trigger new accusations of currency manipulation,” said Leif Schneider, head of international law firm Luther in Vietnam.
Trump ended his first term in the White House with the Treasury declaring Vietnam and Switzerland currency manipulators for their market interventions to weaken the value of their currencies.

Vietnam's central bank has said it was willing to intervene in the currency market in case of adverse economic impacts from currency movements, and has sold dollars in the past to strengthen the dong.

On Tuesday, before new trade figures were released, the bank said it would monitor Trump's policies and make adjustments accordingly.
The dong's most recent depreciation against the dollar is broadly in line with other major currencies.