On 2nd of April 2025, the US administration stated that current foreign trade and economic practices constitute a national emergency, President Trump imposed responsive tariffs to all countries that aimed at strengthening the international economic position of the United States and protecting American workers. The introduction of a 46% tariff on Vietnam could soon increase operational costs for leading companies in the apparel, furniture, and other industries like sportswear giant Nike, which has moved production lines from China to Vietnam. The tariffs on Vietnam will take effect on April 9.
President Trump said “Vietnam – great negotiators, great people. They like me, I like them. The problem is they charged us 90%. We (are) going to charge them 46%.”
This article explores Vietnam’s export landscape, its experience during Trump’s first term, the implications of his second-term tariff policies, and strategies to mitigate these challenges.
The Background
During Trump’s first term (2017-2021), Vietnam reaped benefits from the US-China trade war. As tariffs battered Chinese goods, manufacturers particularly Chinese firms flocked to Vietnam to sidestep duties. By 2020, Chinese companies accounted for nearly one in three new investments in Vietnam, boosting its industrial zones and export volumes. Japanese and South Korean firms also joined the exodus, drawn by Vietnam’s stability and competitive costs. Global giants like Apple, Samsung and Intel have substantially expanded their Vietnamese operations since 2018 – the start of the trade war.
Hai Phong is one of the busiest ports in the world, exporting more than $26 Billion worth of products, and is considered the center point of Vietnam’s growth. This city is close to Shenzhen, the bustling Chinese tech center, and after Trump imposed tariffs in his first term, investment increased in this city seen as a manufacturing alternative to China.
Vietnam’s export engine thrives on electronics, textiles, footwear, machinery, and furniture, with the US absorbing nearly a third of its total exports. In 2024, bilateral trade hit $149.6 billion, cementing Vietnam as one of the US’s largest import sources. Electronics, including smartphones and components, lead the pack, followed by textiles and footwear, sectors deeply integrated into global supply chains. This export reliance, while a boon for Vietnam’s GDP, amplifies its vulnerability to US policy shifts.
Current situation and new reciprocal tariffs
Vietnam has emerged as a global trade powerhouse, leveraging its strategic location and low-cost labor to become a manufacturing hub. With the US as Vietnam’s largest export market, accounting for $136.6 billion in goods last year (up 19.3% vs 2023), roughly 30% of its GDP, any shift in US trade policy may have potential to ripple through its economy. Vietnam’s substantial trade surplus with the US, that hit $123.5 billion in 2024 (a rise of 18.1% from 2023), has come under increased scrutiny, making it a prime candidate for the Trump administration’s protectionist policies, especially following the imposition of new tariffs on Vietnam announced on April 2, 2025.
Sector-specific tariffs that impact on Vietnam
The 46% tariff on Vietnam, as mentioned, may likely affect a broad range of goods, particularly those where Vietnam has a high export volume to the US and a significant market share in the US. These include:
- Computers, Electrical Products & Parts; Telephones and Their Parts; Other Machinery, Instruments, Accessories: Giant technology firms may need to reassess their investment strategies in Vietnam, potentially impacting the industry’s ability to attract foreign direct investment (FDI).
- Textiles and Sewing Products: The U.S. is Vietnam’s largest textile and garment consumer market, accounting for approximately 44% of the industry’s total turnover in 2024.
- Wood and Wooden Products: The U.S. accounts for more than half of Vietnam’s wood exports, and tariffs are significantly affecting domestic companies.
- Footwear: Major corporations such as Nike, Adidas, and other leading footwear manufacturers rely heavily on Vietnam’s production. Rising cost pressures could lead to supply chain disruptions, reduced profitability, and potentially higher prices for consumers.
Rizwan Khan, Managing Partner at Vieter Vietnam states: “While tariffs present challenges, Vietnam’s strategic initiatives, digital transformation, and proactive measures by manufacturers position it well to navigate these obstacles. Meanwhile, the USA may experience short-term disruptions but aims to bolster its domestic manufacturing sector.”
Vietnam’s robust trade relationships with the EU, Japan, and South Korea help buffer against US tariffs. Although, the tariffs could dampen GDP growth due to reduced export volumes in key sectors. However, Vietnam’s competitive manufacturing edge and shift towards a digital economy—driven by initiatives like the National Strategy for Digital Economy and Digital Society Development—enhance economic resilience.
On the other hand, American consumers and businesses may face inflationary pressures and higher costs for Vietnamese imports. However, the tariffs aim to stimulate domestic manufacturing, potentially leading to job creation and increased economic activity in the long term.
This is an opportunity for investors in Vietnam as they should consider diversifying their portfolios by exploring opportunities in Vietnam’s burgeoning digital economy, renewable energy sector, and high-tech manufacturing. Additionally, leveraging Vietnam’s Special Economic Zones (SEZs) can provide tax breaks and streamlined regulations.
For manufacturers in Vietnam, it is time they should start looking at reducing reliance on US markets by expanding to other regions. Achieving cost efficiencies is another area that could work in favor of manufacturers in the long run.
For US businesses they may shift to domestic suppliers to avoid tariffs and reduce shipping costs. Also, they may use alternative materials or components subject to lower tariffs. In certain cases, ensuring that products are classified under the lowest possible tariffs. Another alternative is to negotiate long-term prices by locking in prices and reduce exposure to tariff fluctuations.
Vlad Savin, Partner at Vieter Vietnam comments:
Since 2014, Vietnam has capitalized on the China+1 strategy, significantly boosting its exports to the US. The 2018 US-China trade war further accelerated this growth. However, the recent 46% reciprocal tariff imposed by the US on April 2, 2025, serves as a stark warning. The US aims to address perceived benefits Vietnam has gained from global supply chain shifts, potential trans-shipments, and suspected currency manipulation.
Vietnam’s export-driven economy, which relies heavily on foreign direct investment (FDI), faces challenges due to these tariffs. In 2024, Vietnam’s exports to the US amounted to $137 billion, representing 30% of its GDP. Approximately 75% of these exports are FDI-driven, primarily from American companies like Intel, Nike, and Apple. These investors, deeply integrated into Vietnam’s economy, are unlikely to relocate their production quickly despite the new tariffs.
While the short-term impact on exporters may be significant, Vietnam’s resilience and business acumen offer hope. Long-term investments by companies such as Samsung, which produces 50% of its smartphones in Vietnam, are expected to continue generating value. The adaptability of Vietnam’s business environment and proactive government measures will be crucial in navigating these challenges.
The China+1 strategy, which has been a key growth driver, may lose momentum due to broader ASEAN tariffs. Vietnam must diversify its export markets and develop new commercial relationships. The digital economy, projected to reach 30% of GDP by 2030, along with investments in financial centers and innovation, will be vital for Vietnam’s future growth.
Vietnam’s effective “bamboo diplomacy,” focused on mutual economic interests, will likely lead to continued negotiations with the US to mitigate tariff impacts. The country must also enhance its growth strategy beyond manufacturing and exports, leveraging opportunities in the financial and technology sectors.
What’s next?
Vietnam should continue a strategic and pragmatic approach to minimize the risks of tariffs under President Trump’s administration, focusing on:
- Trade and Investment Framework Agreements (TIFAs) mechanism to improve cooperation and enhance opportunities for trade and investment.
- “Bamboo diplomacy”, trade adjustments, and economic collaboration with the US. Notably, Vietnam has introduced new regulations that will reduce import tariff rates for certain goods, effective as of March 31, 2025 or MOUs signed in March 2025 between Vietnam and the US to increase the purchase of US goods.
The Trump administration’s 46% tariff on Vietnam, enacted in April 2025, threatens the country’s economy by increasing currency volatility, slowing economic growth projections, and raising production costs for companies like Nike and Intel. At the same time, U.S. consumers face higher prices and increased inflation risks. Despite these challenges, Vietnam’s long-term economic outlook remains resilient, driven by proactive policies from Vietnam’s government and an expanding domestic consumer market fueled by rising incomes. The Vietnamese authorities have urgently planned an official delegation to the US to negotiate with the Trump administration. A successful negotiation could help mitigate the tariff’s impact and pave the way for a more balanced trade relationship.
Rizwan Khan – Managing Partner – r.khan@Vieter.com
Vlad Savin – Partner – v.savin@Vieter.com