The United States is one of Vietnam’s largest and long-term export markets and also a comprehensive strategic partner since 2023. However, the recent decision by the U.S. to impose a 46% tariff tax on imported goods from Vietnam has sent shockwaves through both governments and businesses, sparking discussions about its potential economic impact. This significant tariff increase aims to address concerns over trade imbalances, but its long-term consequences could be far-reaching for both countries.

U.S. Tax Policy Changes and reciprocal tariffs

On April 2, 2025, U.S. President Donald Trump announced a baseline tariff of 10% on all imports from countries and territories worldwide, effective from April 5, 2025. Shortly after, the U.S. unveiled higher tariffs, called reciprocal tariffs, targeting nations with significant trade surpluses with the U.S., including Vietnam [4]. A 46% tariff was imposed on 90% of goods imported from Vietnam to the U.S. This tariff is among the highest, alongside those for China and Cambodia, aimed at addressing the U.S. trade deficit and concerns over Chinese goods being rerouted through Vietnam to bypass tariffs.

Certain goods are exempt from the U.S. countervailing tariff adjustments. These include items already taxed under other regulations (50 USC 1702); steel, aluminum, automobiles, and auto parts taxed under separate provisions; copper, pharmaceuticals, semiconductors, and lumber; all goods potentially subject to future tariffs; gold bullion; energy; and specific minerals unavailable in the U.S.

Since the announcement of the countervailing tariff policy, the U.S. has continuously adjusted its timeline and scope of application. On April 9th, Washington postponed the imposition of reciprocal tariffs (excluding China) for 90 days for non-retaliatory trading partner countries [3]. Instead of taking effect on April 9th, the reciprocal tariff policy has been delayed until July 8th. During this period, Vietnamese goods, as well as goods from non-retaliatory countries, are subject only to the baseline 10% tariff. This delay is seen as a critical negotiation window, allowing many countries—including Vietnam—to push for dialogue and adjust bilateral trade policies.

President Trump announced the reciprocal tariffs

원천: ABC News

Vietnam-US Trading activities

Over the past five years, Vietnam has consistently maintained a significant trade surplus with the United States, with the surplus value increasing by 64% from approximately $63.4 billion in 2020 to nearly $106 billion in 2024 [1]. The total bilateral trade turnover in 2024 reached $132 billion, of which Vietnam’s exports to the United States are estimated at nearly $119 billion. In 2024, Vietnam’s top three export items to the United States were computers, electronic products, and components (19.4% of total exports), machinery, equipment, tools, and spare parts (18.5%), and textiles and garments (13.5%) [1]. These three categories together accounted for 51.4% of Vietnam’s total export value to the U.S., underscoring their significant role in bilateral trade relations.

Vietnam’s import value from the United States remained significantly lower compared to its export value, amounting to approximately $13 billion [6]. This figure showed little variation from 2020, with imports consistently ranging between $13 billion and $15.3 billion. This disparity created a substantial trade deficit in favor of Vietnam. The main imported items from the U.S. included computers, electrical products, spare parts, and components (28.7%), other products (10.5%), machinery, equipment, tools, and instruments (7.3%), as well as animal fodder and animal fodder materials (6.7%) [7].

This demonstrates a substantial trade imbalance between the two nations. Vietnam exports significantly more goods to the U.S. than it imports, resulting in a trade surplus for Vietnam. Many experts believe this imbalance is a key factor behind the recently announced reciprocal tariff by President Trump [8].

Vietnam-US trading value record 2020-2024

단위: 10억 달러

원천: General Department of Vietnam Customs and Ministry of Industry and Trade

Impact assessment on Vietnam

The trend of the U.S. tightening imports and increasing protectionism is irreversible, as it is part of a strategy to restore domestic manufacturing. For Vietnam—an export-oriented economy—this pressure is unavoidable.

Industries initially predicted to suffer the most direct negative impacts from this policy include textiles and footwear, furniture and interior goods, seafood, electronics, and components [9]. These sectors account for a significant proportion of Vietnam’s export turnover to the U.S., with many businesses heavily dependent on this market. Among them, textiles and footwear are considered the most sensitive, as the U.S. is currently the largest export market for companies in this field. The furniture and interior goods sector is also vulnerable, given the widespread presence of Vietnamese wood products in the U.S. market. Similarly, the electronics and components industry—known for its high export volume—faces risks of supply chain disruptions and order reductions if tariffs increase production costs.

Additionally, this information has significantly impacted the sentiment of foreign investors in Vietnam, particularly multinational companies producing goods for the U.S. market. The tariff hike, which causes a sudden increase in the cost of “Made in Vietnam” products, undermines price competitiveness, forcing businesses to reconsider maintaining, downsizing, or relocating part of their production lines to other countries in the region with lower or no tariffs. Based on the comparative reciprocal tariff rates, several regional countries might indeed become attractive alternatives for foreign investors looking to optimize costs, such as Singapore (10%), Philippines (17%), Malaysia (24%), Indonesia (32%), Thailand (36%) [13].  Consequently, the industrial real estate market, industrial park infrastructure, and logistics—which have benefited from the FDI wave—may also be indirectly affected through reduced occupancy rates, declining demand for production spaces, warehouses, and logistics services.

However, this policy also has a positive impact on domestic production. Vietnam can take advantage of this time to develop its specialized manufacturing industry. Although China is currently the country facing the highest tariffs from the U.S., due to its geographic proximity and good diplomatic relations with Vietnam, it is considered a strategic destination for factories looking to avoid retaliatory tariffs when exporting to the U.S. The Trump administration places great importance on determining the origin of goods and applies the principle of “Substantial Transformation” to assess whether a product qualifies as the export country’s goods [10]. If the manufacturing process in Vietnam is limited to simple processing or assembly, without significant changes in the structure or function of the product, the U.S. may still consider it Chinese goods and impose high retaliatory tariffs. However, if the production process in Vietnam is sufficiently deep, causing a clear transformation in structure or function, the product will be recognized as Vietnamese goods and may enjoy lower tax rates.

This is particularly beneficial for Vietnam because, in the past, the country was mainly known as a location for processing and assembling rather than specialized manufacturing. The transfer of technology and advanced production processes from Chinese enterprises helps Vietnam develop high-value industries, especially in fields such as electronics, mechanics, and textiles. Although in the short term, this transfer may not significantly change export products due to the time required for adaptation, in the long run, it will provide a solid foundation for Vietnam to improve labor skills, enhance product quality, and increase productivity, contributing to a more sustainable domestic manufacturing industry.

Vietnamese Government’s initial response measures and implications for businesses

The Vietnamese government swiftly implemented measures to respond to U.S. tariff actions. On the diplomatic front, Party General Secretary To Lam held a phone call with U.S. President Donald Trump to propose a fairer bilateral tax mechanism [11]. Concurrently, the Prime Minister established a special task force to closely monitor, assess impacts, and recommend appropriate strategies to proactively adapt to U.S. economic and trade policy adjustments. The negotiation delegation visited the U.S. as Special Envoys of Party General Secretary To Lam to discuss bilateral economic and trade issues [12]. Deputy Prime Minister Ho Duc Phoc met with U.S. Trade Representative Jamieson Greer during this visit. The delegation achieved its first positive outcome as the U.S. agreed to initiate negotiations on a reciprocal trade agreement. This agreement will include provisions on tariffs and propose immediate exchanges between technical teams from both sides. Domestically, the government convened meetings with associations and export businesses to explore the possibility of reducing import tariffs on certain U.S. goods to balance trade and support businesses in maintaining their market presence. Vietnam’s proactive approach during the tariff suspension and negotiation period is deemed essential.

For businesses, domestic exporters must quickly implement adaptive measures to address the pressure from the U.S.’s reciprocal tariff. The top priority is market diversification—many textiles, furniture, and seafood enterprises have actively sought new customers in regions like the Middle East, Europe, and Japan to reduce dependence on the U.S. market, which accounts for a significant share of total export turnover. Simultaneously, businesses must enhance production optimization by tightly controlling input materials, improving product quality, and especially ensuring transparency in origin to meet increasingly stringent traceability requirements from the U.S. The high tariffs imposed by the U.S. also aim to curb Chinese goods disguised as Vietnamese exports to the U.S., making clear traceability of Vietnamese goods even more critical.

Although the ability of Chinese enterprises to shift production to Vietnam will benefit Vietnam’s domestic manufacturing economy, there are still some risks regarding the determination of product origin. The U.S. applies the principle of “Substantial Transformation” to assess whether a product qualifies as Vietnamese goods. If the manufacturing process in Vietnam does not create significant changes, the product may be considered Chinese goods and subjected to high retaliatory tariffs. China has clearly played a major role in Vietnam’s export boom to the U.S, from raw materials to finished products [2]. However, China is not the central story. Therefore, from a governmental perspective, Vietnam needs to actively promote technology transfer—not only for Chinese enterprises looking to invest in Vietnam but also for businesses from other countries—to enhance the depth of production within Vietnam. From a business perspective, enterprises need to diversify their sources of raw materials to comply with U.S. product evaluation principles. Vietnam can take advantage of this situation and increase investment capital to move up the value chain, gradually reducing dependence on foreign inputs.

결론

In conclusion, the recent escalation of U.S. tariffs on Vietnamese imports highlights significant challenges for the trade relationship between the two nations, despite their long-standing partnership. While Vietnam remains a vital export-oriented economy, these tariffs are poised to pressure key industries like textiles, furniture, and electronics, demanding swift adaptation and diversification efforts. At the same time, the move reinforces the U.S.’s strategic pivot toward domestic manufacturing and trade protectionism, which carries broader implications for global commerce. Vietnam’s proactive government measures and businesses’ resilience will be critical during this transitional period. The outcome will depend heavily on bilateral negotiations and collaborative efforts to address trade imbalances fairly.

[1] Phap Luat Doanh Nhan News. Nearly 120 billion USD of Vietnamese goods to the U.S. in 2024, electronics and textiles take a large share.

[2] Lowy Institute. Made in Vietnam or Backdoor Chinese Exports?

[3] NBC News. Trump tariffs: President announces 90-day pause – what to know.

[4] Reuters. US starts collecting Trump’s 10% tariff, smashing global trade norms.

[5] Vietnam Plus. The U.S. imposes a 46% tariff on some imported goods from Vietnam.

[6] SGGP. Trade between Vietnam and the U.S. in recent years.

[7] Vietnam Briefing. Understanding the US tariff list and its implications for Vietnam.

[8] VnEconomy. How does the U.S. calculate the 46% tariff on Vietnam?

[9] Thanh Tra. The U.S. imposes a 46% countervailing duty on Vietnamese goods, which sectors are most affected?

[10] U.S. Department of Commerce. Rules of Origin and Substantial Transformation.

[11] VnExpress. General Secretary Tô Lâm has a phone conversation with President Trump.

[12] VOV. Vietnam, the U.S. agree to start negotiations on a trade deal.

[13] VTV Online, ASEAN convenes special meeting on U.S. tax policy.