Vietnam’s booming trade relationship with the US is under increasing threat as former US President Donald Trump signals sweeping tariffs that could impact nearly all of the country’s exports to its largest market.
Vietnam shipped more than $142 billion worth of goods to the US in 2024, making up approximately 30% of its GDP, according to UN data.
This comes as Trump’s trade policies take a sharply protectionist turn, raising concerns among Vietnamese officials and foreign companies about potential economic disruption.
Vietnam had been a major beneficiary of the US-China trade war during Trump’s first term, attracting manufacturers looking to sidestep tariffs on Chinese goods. Its high trade surplus with the US has made it a target for reciprocal tariffs.
Vietnam now faces an urgent need to recalibrate its trade strategy to protect its economy from potential sanctions, as US trade officials scrutinise the country’s tax policies, energy partnerships, and role in global supply chains.
Vietnam’s trade policies under scrutiny
Vietnam’s trade policies, including import duties and non-tariff barriers, are now in focus as the US weighs retaliatory tariffs.
Vietnam applies higher average levies on imports compared to US duties, and its value-added tax system further raises costs for foreign goods. Some economists argue that Vietnam’s effective bilateral tariff rates remain lower than those of the US.
A major concern is how Washington will determine the new tariff rates. The US Trade Representative’s 2024 report outlined a long list of non-trade barriers Vietnam imposes, including strict registration requirements and import bans.
These barriers are now under review as part of broader US scrutiny, with potential implications for Vietnam’s export-dependent economy.
Vietnamese officials have shown willingness to negotiate and even consider lowering tariffs on US goods, but this could trigger a wider trade policy shift requiring reductions for other trading partners as well.
Such a move would complicate Vietnam’s broader trade relationships, making it a challenging balancing act for policymakers.
Energy deals as leverage
Vietnam is exploring ways to mitigate the impact of tariffs by increasing US energy imports, according to a Reuters report.
The country has held discussions with US officials about purchasing liquefied natural gas (LNG), a sector Vietnam is keen to expand as it works towards a more diversified energy mix. These talks have yet to materialise into concrete agreements.
A more ambitious move is Vietnam’s planned revival of its nuclear power programme.
The country is looking for suppliers of nuclear technology, and US firms could be potential partners.
If Vietnam commits to large-scale energy deals with the US, it could provide leverage in trade negotiations and potentially ease tariff tensions.
Agriculture and transhipment concerns
Vietnam has signalled openness to increasing imports of US agricultural products, but the scale of potential purchases is unlikely to significantly offset trade imbalances.
In 2023, Vietnam imported just $3.4 billion worth of US farm goods—only a fraction of its overall trade surplus. While increased agricultural imports might help in trade discussions, they are unlikely to be a sufficient countermeasure against sweeping tariffs.
Meanwhile, the US remains concerned about Vietnam’s role in transhipping Chinese goods to bypass tariffs. Vietnam has long been suspected of serving as a transit hub for Chinese products destined for the US.
In sectors such as solar panels, Vietnamese firms have already faced penalties for facilitating Chinese exports.
Vietnam is now attempting to avoid further scrutiny by imposing temporary anti-dumping duties on Chinese steel imports.
This is a defensive move aimed at reducing the risk of the US slapping additional 25% tariffs on Vietnamese steel exports, which are already subject to anti-dumping duties.
The country’s reliance on the US market has made it particularly vulnerable to protectionist policies, forcing officials to reassess their trade and economic strategies.
While Vietnam is exploring multiple avenues—ranging from energy deals to tariff negotiations—the effectiveness of these measures remains uncertain.
As Trump pushes ahead with his aggressive trade agenda, Vietnam must move quickly to protect its export-driven economy from escalating trade tensions with its biggest customer.
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