US Reportedly Pushes Vietnam to Decouple from Chinese Tech

A merchant carries goods that she bought at Long Bien Market, one of the largest wholesale markets in Hanoi, in Hanoi, Vietnam, May 28, 2025. REUTERS/Chalinee Thirasupa
A merchant carries goods that she bought at Long Bien Market, one of the largest wholesale markets in Hanoi, in Hanoi, Vietnam, May 28, 2025. REUTERS/Chalinee Thirasupa
TT
20

US Reportedly Pushes Vietnam to Decouple from Chinese Tech

A merchant carries goods that she bought at Long Bien Market, one of the largest wholesale markets in Hanoi, in Hanoi, Vietnam, May 28, 2025. REUTERS/Chalinee Thirasupa
A merchant carries goods that she bought at Long Bien Market, one of the largest wholesale markets in Hanoi, in Hanoi, Vietnam, May 28, 2025. REUTERS/Chalinee Thirasupa

The United States is pushing Vietnam in tariff talks to reduce the use of Chinese tech in devices that are assembled in the country before being exported to America, three people briefed on the matter said.

Vietnam is home to large manufacturing operations of tech firms such as Apple and Samsung, which often rely on components made in China. Meta and Google also have contractors in Vietnam that produce goods such as virtual reality headsets and smartphones.

The Southeast Asian nation has been organizing meetings with local businesses to boost the supply of Vietnamese parts, with firms showing willingness to cooperate but also warning they would need time and technology to do so, according to one person with knowledge of the discussions.

The Trump administration has threatened Vietnam with crippling tariffs of 46% which could significantly limit access for Vietnam-made goods to their main market and upend the Communist-run country's export-oriented growth model.

Vietnam has been asked "to reduce its dependency on Chinese high-tech," said one person familiar with the discussions. "That is part of the restructuring of supply chains and would in turn reduce US dependency on Chinese components," the person added.

The ultimate objective is to speed up US decoupling from Chinese high-tech while increasing Vietnam's industrial capacity, a second person said, citing virtual reality devices as an example of Vietnam-assembled products that are too dependent on Chinese technology.

All sources declined to be identified as the discussions were confidential. Reuters was not able to learn if the US has proposed numerical targets such as caps on Chinese content for "Made in Vietnam" goods or different tariff rates based on the amount of Chinese content.

Apple, Samsung, Meta and Google did not reply to Reuters requests for comment.
As the US-imposed deadline of July 8 nears before the tariffs take effect, the timing and scope of a possible deal remain unclear.

All sources stressed that while the US has made broader requests for Vietnam to reduce its reliance on China, tackling the issue of Chinese high-tech content in exports was a key priority.

Last year, China exported around $44 billion of tech such as electronics components, computers and phones to Vietnam, about 30% of its total exports to the country.

Vietnam shipped $33 billion of tech goods to the United States or 28% of the US-bound exports. Both flows are on the rise this year, according to Vietnam's customs data.

Vietnam's trade ministry did not reply to Reuters requests for comment. Separate sources have previously said that US demands were seen as "tough" and "difficult" by Vietnamese negotiators.

The US also wants Vietnam to crack down on the practice of shipping Chinese goods to America with misleading "Made in Vietnam" labels that draw lower duties - which Vietnam is also trying to heed.

The ministry said on Sunday that a third round of talks last week in Washington ended with progress, but critical issues remain unresolved.

Vietnam's ruling Communist Party chief To Lam intends to meet US President Donald Trump in the United States, possibly in late June, officials with knowledge of the matter said. No date has been announced for the trip.

The White House and Vietnam's foreign ministry did not respond to requests for comment on the possible visit.

NOT TOO FAST

Local firms attending meetings organized by the trade ministry in recent weeks expressed a general willingness to adapt, but many warned that instant changes "would destroy business", according to one of the sources.

Vietnam has been slowly developing an industrial ecosystem with local suppliers but it has a long way to go before it can match China's advanced supply chains and cheaper pricing, industry executives say.

"Vietnam is about 15–20 years behind China in somewhat fully replicating its supply chain scale and sophistication, but it's catching up fast, especially in key sectors like textiles and electronics," said Carlo Chiandone, a Vietnam-based supply chain expert.

Abrupt changes to existing practices may hurt Vietnam's delicate relationship with China, which is both a major investor in its Southeast Asian neighbor and a source of security concerns.



Microsoft Halts China-based Tech Support for Pentagon Systems

FILE - The Microsoft company logo is displayed at their offices in Sydney, Australia, on Feb. 3, 2021. (AP Photo/Rick Rycroft, File)
FILE - The Microsoft company logo is displayed at their offices in Sydney, Australia, on Feb. 3, 2021. (AP Photo/Rick Rycroft, File)
TT
20

Microsoft Halts China-based Tech Support for Pentagon Systems

FILE - The Microsoft company logo is displayed at their offices in Sydney, Australia, on Feb. 3, 2021. (AP Photo/Rick Rycroft, File)
FILE - The Microsoft company logo is displayed at their offices in Sydney, Australia, on Feb. 3, 2021. (AP Photo/Rick Rycroft, File)

Microsoft said Friday it is making sure that personnel based in China are not providing technical support for US Defense Department systems, after investigative news site ProPublica revealed the practice earlier this week.

Pentagon chief Pete Hegseth confirmed that work on Defense Department cloud services had been outsourced to people in China, insisting that the country will not have "any involvement whatsoever" with the department's systems going forward.

"Microsoft has made changes to our support for US Government customers to assure that no China-based engineering teams are providing technical assistance for DoD Government cloud and related services," the company's chief communications officer, Frank Shaw, said in a post on X.

ProPublica reported Tuesday that the tech giant was using engineers based in China -- Washington's primary military rival -- to maintain Pentagon computer systems, with only limited supervision by US personnel who often lacked the necessary expertise to do the job effectively.

US Senator Tom Cotton asked Hegseth to look into the matter in a letter dated Thursday, and the Pentagon chief responded that he would do so.

Hegseth then posted a video on X Friday evening in which he said "it turns out that some tech companies have been using cheap Chinese labor to assist with DoD cloud services. This is obviously unacceptable, especially in today's digital threat environment."

"At my direction, the department will... initiate -- as fast as we can -- a two-week review, or faster, to make sure that what we uncovered isn't happening anywhere else across the DoD," AFP quoted him as saying.

"We will continue to monitor and counter all threats to our military infrastructure and online networks," he added, thanking "all those Americans out there in the media and elsewhere who raised this issue to our attention so we could address it."