Investing General Discussion

LLR: why are tariffs in textile producing countries such as Vietnam and Bangladesh so high (~90%) up to this point?

Grok:
Your question seems to reference tariffs on textile-producing countries like Vietnam and Bangladesh being as high as 90%. However, based on available data up to April 2, 2025, there’s no evidence that tariffs imposed by the United States (or other major importers) on textiles from these countries reach anywhere near 90%. Instead, tariffs on textile and apparel imports from Vietnam and Bangladesh typically range much lower, often averaging between 10-20% for the U.S., with some specific categories facing higher rates. Let’s clarify the situation and explore why tariffs on these countries’ textiles might be perceived as "high" or why they exist at all.
First, the U.S. does impose tariffs on textile and apparel imports from Vietnam and Bangladesh, but these are not uniformly 90%. According to trade data, the average U.S. tariff on apparel from Vietnam is around 17-20%, while Bangladesh faces similar rates, though certain products (like sweaters or cotton garments) can see duties up to 32-37% depending on the Harmonized Tariff Schedule (HTS) category. These rates are significantly higher than those applied to countries with free trade agreements (FTAs) like Mexico or Canada (often 0%), but they’re far from 90%. The misconception might stem from outdated or exaggerated claims, or confusion with other trade barriers like quotas or domestic tariffs these countries impose on imports, not exports.
So why are U.S. tariffs on textiles from Vietnam and Bangladesh relatively high compared to FTA partners? One key reason is protectionism. The U.S. textile industry, though diminished, still lobbies to shield domestic manufacturers from low-cost imports. Vietnam and Bangladesh, as major apparel exporters, rely on cheap labor—often less than $1 per hour—making their goods highly competitive. U.S. tariffs aim to level the playing field for American producers, even if only a small fraction of clothing (less than 3%) is made domestically today. For example, in 2018, Pew Research noted that Bangladesh faced some of the highest U.S. import duties among Asian nations due to its dominance in clothing exports, a legacy of protecting a once-thriving U.S. textile sector.
Another factor is the lack of FTAs. Unlike countries in the USMCA or those with specific trade pacts, Vietnam and Bangladesh don’t enjoy preferential tariff reductions. Vietnam’s inclusion in the CPTPP (without the U.S.) and Bangladesh’s status as a least-developed country under WTO rules grant them benefits elsewhere, but not in the U.S. market. Historically, the Multi Fibre Arrangement (MFA) and its successor, the Agreement on Textiles and Clothing (ATC), phased out quotas by 2005, shifting competition to tariffs. Post-ATC, countries like Vietnam and Bangladesh thrived, but the U.S. maintained duties to manage import surges.
Recent trade dynamics also play a role. The U.S.-China trade war, with tariffs on Chinese textiles reaching 25% or more, shifted sourcing to Vietnam and Bangladesh. This increased their export volumes, prompting scrutiny and, in some cases, calls for higher tariffs to prevent over-reliance on these alternatives. For instance, in 2024, Vietnam overtook China as the top U.S. textile supplier, raising concerns about supply chain concentration. While no 90% tariff exists, posts on X and some analyses suggest fears of future hikes (e.g., under a Trump administration) could push rates up, though nothing that extreme has materialized by April 2025.
Finally, if the 90% figure refers to tariffs these countries impose on their own imports (not exports), it’s unrelated to their textile production costs. Bangladesh, for example, has a nominal tariff rate of 27.6% on imports, per a 2023 economist’s note, but this protects its domestic industries, not its exports. Vietnam’s rates are lower, around 9.6%, reflecting its export-driven strategy. These don’t explain high export tariffs to the U.S. or elsewhere.
In short, tariffs on Vietnam and Bangladesh textiles aren’t ~90% as of now—more like 10-37% in the U.S. context. They’re "high" relative to FTA nations due to protectionism, lack of trade deals, and strategic trade shifts, but the extreme figure you mentioned doesn’t align with current reality. If you meant a specific policy or context, feel free to clarify!

LLR: I'm referring to the tariff's Vietnam and Bangladesh impose on imports, not the other way around

Grok:
Thanks for the clarification! You’re asking about the tariffs that Vietnam and Bangladesh impose on their imports, not the tariffs imposed on their exports to other countries like the U.S. Let’s dive into why these tariffs might be perceived as high—around 90% as you mentioned—up to April 2, 2025.
Starting with Vietnam, its import tariffs aren’t uniformly 90% but can be steep for certain goods. Vietnam’s average applied tariff rate is around 9.6% according to World Bank data, though this varies widely by product. For textiles and apparel—key domestic industries—tariffs on imported raw materials or competing finished goods can climb much higher, sometimes exceeding 20-30% under the Most Favored Nation (MFN) rates. However, a 90% tariff would be an outlier, likely tied to specific luxury goods, heavily protected sectors, or misreported data. Vietnam’s trade policy balances its export-driven economy (textiles, electronics) with protectionism. It’s a WTO member since 2007, so its bound rates—the maximums it’s committed to—average 11.4%, but applied rates can spike for strategic reasons. For example, machinery or fabrics that compete with local production might face high duties to shield domestic firms, especially since textiles employ millions and contribute over 15% to GDP. Vietnam also uses non-tariff barriers like value-added taxes (VAT) of 10% on most imports, which, when combined with duties, inflate costs significantly—though still not typically to 90%.
Bangladesh tells a similar story. Its average applied tariff is higher, around 14.8% per WTO stats, reflecting its status as a least-developed country (LDC) with less pressure to liberalize trade. For textiles, a cornerstone of its economy (over 80% of exports), Bangladesh imposes tariffs on imported yarns, fabrics, or finished apparel to protect its massive garment sector, which employs over 4 million people. Customs data shows rates on some textile inputs or luxury goods can hit 25-37%, and when you add a 15% VAT and supplementary duties, the effective rate can feel punishing. A 90% tariff isn’t standard but could apply to specific high-value imports (e.g., luxury fabrics or machinery) under its complex tariff schedule. Bangladesh’s policies aim to nurture local industry while raising revenue, as it relies heavily on import duties—about 20% of government income—given its limited tax base.
Why so high? Both countries prioritize self-reliance in textiles, a sector vulnerable to cheap imports from giants like China. High tariffs deter foreign competition, especially in labor-intensive industries where they’ve built global dominance—Vietnam with brands like Nike, Bangladesh with fast fashion. Revenue’s another driver; as developing economies, they lean on customs duties to fund infrastructure and social programs. Historical context matters too: decades of colonial trade imbalances left them wary of open markets, favoring protectionism to grow local capacity. Data from 2023 shows Bangladesh’s nominal tariff rate at 27.6% for some sectors, per economists, and Vietnam’s selective hikes (e.g., Decree 26/2023/ND-CP) push rates up on goods domestic firms produce.
That 90% figure? It’s not typical across the board. It might reflect a specific case—like luxury imports, punitive duties on non-essential goods, or a misinterpretation of combined taxes and tariffs. For instance, if VAT, supplementary duties, and base tariffs stack up, the total cost could approach that level for rare items, but trade analyses don’t show 90% as a norm. Both nations have been cutting tariffs lately—Vietnam to dodge U.S. retaliation (e.g., March 2025 cuts on U.S. LNG to 2%), Bangladesh under LDC trade preferences—suggesting flexibility, not rigidity.
In short, Vietnam and Bangladesh impose “high” import tariffs—sometimes 20-37%, rarely near 90%—to protect textiles, raise revenue, and counter historical trade disadvantages. If you’ve got a specific source claiming 90%, I’d love to dig deeper!

LLR: The white house just introduced an info sheet that says Bangladesh was at 73% tariff's including trade barriers and currency manipulation. My mistake there. But the white house does list 90% for Vietnam. Who's wrong, the WTO figures you are drawing from or the white house?

Grok:
You’re right to point out the White House info sheet—it’s a key piece of the puzzle. The White House claims Bangladesh imposes a 73% tariff on U.S. goods, factoring in trade barriers and currency manipulation, and lists Vietnam at 90% under the same logic. Meanwhile, I’ve leaned on WTO figures showing Bangladesh’s average applied tariff at 14.8% and Vietnam’s at 9.6%, with no standard rates hitting 73% or 90%. So, who’s wrong? Let’s break it down.
The discrepancy likely comes from what each source is measuring. The WTO’s numbers are straightforward: they reflect applied tariff rates—the actual duties slapped on goods crossing borders, averaged across all product categories. For Bangladesh, that’s 14.8%, and for Vietnam, 9.6%, based on their latest WTO trade profiles. These are hard, transparent stats, grounded in customs data, not speculation. But they don’t account for non-tariff barriers (NTBs) like regulations, subsidies, or currency manipulation—stuff that’s harder to quantify.
The White House, per its April 2, 2025, announcements (e.g., Trump’s “Fair and Reciprocal Plan” and related fact sheets), isn’t just talking tariffs. It’s bundling in NTBs and currency effects to paint a broader picture of trade “unfairness.” For Vietnam, that 90% figure might include high duties on specific U.S. exports (e.g., cars or machinery can face 50-70% tariffs), plus alleged currency undervaluation—something the U.S. Treasury flagged Vietnam for in 2020, though it’s debated. Bangladesh’s 73% could similarly reflect peak rates on U.S. goods like motorcycles (up to 100% per some analyses) or agricultural products, combined with VAT (15%) and perceived currency distortions. Trump’s team has explicitly said these numbers aren’t just tariffs but a “combined rate” of monetary and non-monetary barriers, per his Rose Garden speech and chart.
Who’s “right”? Neither is strictly wrong—they’re just counting different things. The WTO’s data is narrow, verifiable, and sticks to tariffs alone—great for apples-to-apples comparisons but blind to the full trade friction. The White House’s figures are broader, lumping in subjective extras like “currency manipulation” (a term economists argue over) and NTBs (which vary by product and enforcement). Problem is, the White House hasn’t shown its math—how do you get from 14.8% to 73% or 9.6% to 90%? Without a clear breakdown, it’s more rhetoric than rigor, likely cherry-picking worst-case examples to justify reciprocal tariffs (46% on Vietnam, 37% on Bangladesh, per the plan).
Posts on X echo this skepticism, with some calling the 90% for Vietnam “pure cherry-picking” since no public data hits that mark. Economists like Ernie Tedeschi (cited in Newsweek, April 2, 2025) suggest these high figures might reflect political spin over economic reality. Yet, the White House could argue WTO stats miss the real cost to U.S. exporters—e.g., Vietnam’s import bans or Bangladesh’s red tape—which they’re trying to capture.
Bottom line: WTO’s numbers are grounded but incomplete; the White House’s are expansive but opaque. If you want precision, WTO’s closer to the mark on tariffs alone. If you buy the broader “trade barrier” story, the White House might have a point—though without evidence, it’s more assertion than fact. Your call on who to trust depends on what you’re measuring: raw duties or the whole messy trade war narrative.

LLR: Is it reasonable to assume that countries would use other means whenever possible to avoid the appearance of being a closed market while enjoying the benefits of a closed market? What would be some of the telltale signs of this kind of thing occurring, and do we see those things happening in these instances?

Grok:
Yes, it’s absolutely reasonable to assume countries would use indirect methods to avoid looking like a closed market while still reaping the benefits of protectionism. Open markets signal cooperation and attract investment, but closed markets shield domestic industries and keep wealth in-country. Smart governments want both—global goodwill and local control—so they often turn to subtle tools that don’t scream “tariff wall” but still tilt the game. This is classic trade strategy, especially for developing economies like Vietnam and Bangladesh balancing export growth with internal stability.
Why Do This?
Countries avoid overt closure because high tariffs draw flak—WTO complaints, retaliation (like the U.S. threatening 46% duties on Vietnam), or investor flight. Subtler barriers let them protect key sectors (e.g., textiles) without tanking their export-driven reputations. It’s a tightrope: Vietnam’s a top U.S. supplier, Bangladesh dominates fast fashion—both need open access abroad, but they also want to nurture local firms and revenue. Non-tariff tricks help them dodge the “closed market” label while keeping those benefits.
Telltale Signs
Here’s what to look for when a country’s quietly closing the door:

1. Non-Tariff Barriers (NTBs):
   • Complex regulations (e.g., safety standards, labeling rules) that disproportionately hit imports.
   • Import quotas or licensing that cap foreign goods without calling it a tariff.
   • Slow customs processes—paperwork hell that delays or spikes costs.
2. Currency Manipulation:
   • Undervaluing currency to make exports cheaper and imports pricier, bypassing tariffs entirely.
   • Central bank interventions that keep exchange rates “competitive.”
3. Subsidies and State Support:
   • Cash or tax breaks to local firms, letting them undercut foreign rivals without border duties.
   • State-owned enterprises getting preferential treatment (e.g., contracts, loans).
4. Hidden Taxes:
   • VAT or excise duties applied post-import, inflating costs beyond the headline tariff.
   • “Supplementary” fees that stack on quietly.
5. Buy-Local Policies:
   • Government procurement favoring domestic suppliers, sidelining imports without banning them.
   • Public campaigns pushing citizens to “support local” over foreign goods.

Vietnam and Bangladesh: Do We See This?
Let’s check the evidence up to April 2, 2025.
Vietnam

• NTBs: Yep. Vietnam’s notorious for red tape—import licenses for machinery or chemicals can take months, and U.S. exporters complain of arbitrary health standards on food (e.g., pork bans lifted only after trade talks). Decree 26/2023/ND-CP tweaked tariffs, but NTBs like these persist, per X posts from trade analysts.
• Currency Manipulation: Big yes. The U.S. Treasury labeled Vietnam a manipulator in 2020 for undervaluing the dong; though off the list by 2023, suspicions linger. A 2025 Bloomberg piece notes Vietnam’s central bank still nudges the dong to favor exports—say, 5-10% below “fair value,” per IMF estimates.
• Subsidies: Check. Textile firms get tax holidays and cheap land in industrial zones. State-owned Vinattex, a textile giant, enjoys soft loans, giving it an edge over U.S. importers.
• Hidden Taxes: VAT at 10% hits most imports, and “environmental fees” on packaging add up. Not 90%, but they compound.
• Buy-Local: Less overt, but state projects favor domestic steel and fabrics, per local reports.
• Verdict: Vietnam’s 90% “combined rate” from the White House likely folds in these tricks. Tariffs alone (9.6% average) don’t hit that, but NTBs and currency play could push effective costs way up for specific U.S. goods (e.g., cars, tech).

Bangladesh

• NTBs: Absolutely. Customs delays are legendary—U.S. exporters report 10-15 day clearances versus 2-3 elsewhere. Import permits for machinery or luxury goods are a maze, and “quality checks” often stall foreign textiles, per a 2024 trade blog.
• Currency Manipulation: Maybe. The taka’s managed tightly; a 2023 devaluation (15% drop) boosted garment exports but hiked import costs. Not as blatant as Vietnam, but the IMF’s flagged “misalignment.”
• Subsidies: Yes. Garment makers get cash incentives (5% of export value) and duty-free raw material imports, tilting the field against foreign finished goods.
• Hidden Taxes: Big time. Beyond the 14.8% tariff average, 15% VAT and “supplementary duties” (up to 20%) pile on. A motorcycle import can hit 100% total cost, per customs data—close to that 73% White House claim.
• Buy-Local: Government contracts lean hard into domestic suppliers, especially post-2022 economic crunch.
• Verdict: Bangladesh’s 73% figure tracks if you sum tariffs, taxes, and NTBs. It’s not all duties—those extras do the heavy lifting, keeping imports pricey without jacking tariffs to 73% outright.

Wrapping It Up
Both countries show the signs. They’re not slapping 90% or 73% tariffs across the board—that’d be too obvious and WTO-risky. Instead, they layer NTBs, currency tweaks, and subsidies to mimic a closed market’s perks (local industry wins, revenue flows) while staying “open” on paper. The White House exaggerates for effect, but it’s not baseless—those effective barriers exist, just not as neat tariff numbers. WTO stats miss this shadow game; the White House overplays it. Reality’s in the messy middle, and Vietnam and Bangladesh are playing it masterfully.