One of Donald Trump’s constant complaints against the political establishment back when he originally ran for president had to do with trade policy.
Large American corporations would offer generous campaign donations or other kickbacks to politicians who would enact so-called “free trade” policies, and these policies would enable foreign companies — who often make their products with the help of subsidies from their own governments — to undercut domestic American companies on the market.
On the other hand, those same foreign governments would impose gargantuan tariffs on American goods. Those tariffs either prevented those goods from penetrating foreign markets at all or only allowed them to do so at drastically higher — and hence uncompetitive — prices.
Trump saw this as a way for foreign nations to exploit American companies and consumers from both sides of a transaction.
Well, Vietnam has recently enacted a suite of Trumpian trade policies against Thailand, and the current political establishment in the U.S. would do well to learn from them.
Vietnam Puts Vietnam First
Farmers are among the most critical manufacturers of any nation. They manufacture food. They feed everyone. Their prosperity is therefore essential to the prosperity of the nation.
Realizing this, Vietnam has recently decided to impose an enormous 47.64% tariff on sugar imports from Thailand. The decision to do this came after Vietnam’s trade ministry concluded an investigation into Thailand’s practice of dumping its own subsidized sugar into the Vietnamese market.
The investigation determined that in 2020, Thai sugar imports into Vietnam surged to 1.3 million tons, an increase of 330.4% over the previous year.
The investigation also concluded that since the Thai sugar industry receives extensive support from the Thai government in the form of subsidies, tax breaks and other benefits, Thai sugar manufacturers are able to produce and sell sugar at much lower prices than would otherwise be possible for them.
In total, the Thai government gives the sugar industry about $1.3 billion of support annually, of which about $775 million consists in indirect subsidies and about $525 million consists of direct subsidies.
The Vietnamese care about their own domestic sugar producers and are taking steps to protect them. If only the U.S. political establishment showed the same level of concern for its own domestic manufacturers.