By IndraStra Business News Desk
Cover Image Attribute: A file photo of a factory worker at electric vehicle factory in Haiphong, Vietnam. /Source: Nick Ut/Getty Images
Vietnam is in a decisive phase, dealing with the ramifications of inconsistent U.S. tariff policies led by President Donald Trump The Southeast Asian nation, which has emerged as a manufacturing powerhouse in recent years, is navigating a complex web of trade dynamics, balancing its economic ties with the United States and China while striving to maintain its impressive growth trajectory. The threat of steep tariffs, briefly imposed and then paused, has sent ripples through Vietnam’s industrial hubs, prompting urgent negotiations and strategic recalibrations. With a 90-day window to secure better trade terms, Vietnam’s government and businesses are racing against time to address U.S. concerns over trade surpluses and trans-shipment while preserving the country’s hard-won position in global supply chains.
The saga began on April 9, when Trump announced a 46% “reciprocal” tariff on goods imported from Vietnam, a rate that would have been the highest among Southeast Asia’s six largest economies. This move targeted Vietnam’s substantial trade surplus with the U.S., which reached $123.5 billion in 2024, a significant jump from $39.5 billion in 2018, according to Census Bureau data. The tariff, however, was reset to 10% later that day, granting Vietnam and other affected countries less than 90 days to negotiate with the White House. For Vietnam, a nation heavily reliant on exports to the U.S.—its largest market—the stakes could not be higher. “Vietnam is highly vulnerable,” said Tuan Chu, an associate program manager at RMIT University Vietnam, capturing the anxiety that has gripped the country’s economic planners and business leaders.
Vietnam’s vulnerability stems from its rapid integration into global supply chains, particularly as a beneficiary of the U.S.-China trade war that escalated during Trump’s first term. As tensions between Washington and Beijing intensified, global tech giants like Apple and Samsung sought alternatives to China-based production, turning to Vietnam as part of a “China-plus-one strategy.” This shift fueled a surge in foreign direct investment, with Vietnam receiving $18.5 billion in net FDI, according to World Bank records. The province of Bac Ninh, located 50 kilometers northeast of Hanoi, has been at the heart of this transformation, attracting $5.12 billion in foreign investment in 2024 alone—more than any other region in Vietnam. Home to suppliers for tech giants, Bac Ninh has become a symbol of Vietnam’s manufacturing prowess, producing iPads, MacBooks, and AirPods for Apple and components for Samsung.
Yet, the same factors that have driven Vietnam’s success now expose it to risks. The country’s trade surplus with the U.S. has drawn scrutiny, with some alleging that a portion of Vietnam’s exports involves Chinese goods rerouted to evade higher U.S. tariffs on China. A Harvard Business School research paper, co-authored by Duke University professor Edmund Malesky, estimates that while 84% of Vietnam’s increased manufacturing activity is value-added production, approximately 16% may involve rerouting. “But there’s a smaller part, maybe 16%, depending on how you measure it, which is rerouting, which became a concern for the United States,” Malesky explained. U.S. officials, including White House trade advisor Peter Navarro, have been vocal about this issue, with Navarro claiming on April 6 that “China uses Vietnam to tranship to avoid the tariffs.” Such accusations have fueled Washington’s push for higher tariffs and stricter oversight of Vietnam’s trade practices.
The brief imposition of the 46% tariff sent shockwaves through Bac Ninh’s industrial zones. “The pessimism is spreading. Some people felt the sky was falling down,” said Xie Qing, a factory property realtor in the province, just two days after the announcement. Small and mid-tier electronics suppliers faced the prospect of tighter margins, while global tech giants braced for disruptions. Nguyen Thi Anh Nguyet, CEO of SJ Labor, which recruits workers for Bac Ninh’s factories, noted that Chinese manufacturers had recently approached her to set up production lines, only to pause their plans amid the tariff uncertainty. “Now the plans have been put on hold, so I don’t know if they’ll move or not,” she said. The tariff pause has offered temporary relief, but as Hanh Nguyen, a doctoral researcher at the Australian National University, observed, “Vietnam still has plenty to worry about.”
Complicating matters is Vietnam’s deep economic entanglement with China, its leading trade partner and a major source of parts and components for its manufacturing sector. The 125% tariff on Chinese imports to the U.S. creates a ripple effect, as Vietnam relies on Chinese inputs for many of its exports. “The reciprocal tariff on China still complicates the issue for Vietnam,” Hanh noted, highlighting the delicate balancing act Hanoi must perform. Vietnam’s government is acutely aware of this dilemma, as it seeks to preserve trade with the U.S. without antagonizing China, a powerful neighbor with which it has clashed over South China Sea boundaries. The recent inauguration of Vietnam’s first smart deep-sea port in Hai Phong, attended by high-profile dignitaries, underscores the country’s ambition to remain a competitive player in global trade, but the tariff threat looms large.
In response to U.S. concerns, Vietnam has signaled its willingness to crack down on transhipment abuses. According to a government document and a person familiar with the matter, Hanoi is prepared to tighten controls on Chinese goods shipped through its territory to the U.S. with “Made in Vietnam” labels. Following an emergency meeting on April 3, Vietnam’s Government Office directed trade and customs officials to devise a plan within weeks to address illicit transhipment, though the deadline may extend to late April to avoid provoking China. Additionally, Vietnam is implementing stricter measures on sensitive exports to China, particularly dual-use goods like semiconductors, which could have military applications. A draft decree reviewed by Reuters indicates that Hanoi will introduce new declaration and approval procedures to minimize the transfer of such technologies without U.S. consent, aligning with Washington’s push to curb China’s access to advanced chips.
Vietnam’s diplomatic efforts have been equally proactive. Communist Party chief To Lam, the country’s most powerful politician, called Trump on April 4, offering to reduce tariffs to zero if the U.S. reciprocated—a proposal that reflects Vietnam’s limited leverage, given that its exports to the U.S. were nearly ten times the value of U.S. exports to Vietnam last year. “Vietnam is in a disadvantaged situation,” Hanh remarked, underscoring the imbalance. Meanwhile, trade talks have begun, with Vietnam aiming to lower duties to a range of 22% to 28%, according to sources familiar with the negotiations. Bruno Jaspaert, CEO of Deep C Industrial Zones in Hai Phong, expressed optimism about a potential deal, noting that Vietnam’s role as a key supplier to American buyers could work in its favor. “So my bet is it’s not going to be China. It’s not going to be Europe because Europe will also retaliate. So that leaves Mexico and Vietnam,” he said.
Despite the uncertainty, Vietnam’s allure as a manufacturing hub persists. A Japanese device maker chose the country as its new base just before the tariff pause, and businesses are adopting a “wait and see” approach, as David Yuen-Tung Chan, a researcher at Lingnan University, observed. “Should these adjustments in tariffs endure over the long term, Vietnam could emerge as a significant beneficiary for sure,” Chan said, though he cautioned that tariffs on Vietnamese imports could rise again. In Bac Giang, another manufacturing hub, workers at factories like Luxshare, a key assembler of AirPods, remain focused on their jobs, with some lured by sign-on bonuses of up to 8 million dong ($300). “In 8–9 years of working [in the industry], I’ve never seen such high incentives,” said Vuong Van Hung, a former Luxshare security guard turned recruiter.
Vietnam’s broader tech ambitions are also moving forward. The approval of Starlink’s satellite service, controlled by Trump ally Elon Musk, and the potential certification of Chinese COMAC planes for Vietnamese airlines signal Hanoi’s efforts to diversify its partnerships. However, these gestures come as Chinese leader Xi Jinping prepares to visit, highlighting Vietnam’s delicate diplomacy. As the 90-day negotiation window ticks down, Vietnam faces a pivotal moment. Its success in addressing U.S. demands on trade practices while preserving economic ties with China will decide if it can maintain its growth trajectory and cement its role as a cornerstone of global supply chains. For now, the country braces itself, anxiously awaiting the outcome of this tariff storm, hoping to emerge from this tariff turmoil not just intact but stronger.
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