The US-China trade war is causing a banking crisis to develop in Vietnam. Why?
In order to avoid the US-China trade tariffs, many businesses are shifting their manufacturing and production factories to Vietnam. This relocation phenomenon has caused the ire of the US and Trump has imposed 456% on Vietnam's steels re-exports. Trump looks ready to impose more tariffs against Vietnam for other goods.
As Vietnam has a very lax bank lending regulation, many foreign businesses borrow from local banks to build factories and ramp up their productions. If the made-in-Vietnam products are taxed with additional tariffs by the US, Vietnam's exports will drop drastically and this will impact the banking industry in Vietnam because the non-performing loans will increase tremendously.
Vietnam, with just a population of 97m, won't be able to fight the trade war against the US and has to compromise to buy more US goods to avoid the additional tariffs.
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