Diversifying export markets, increasing production localization to offset impacts of Trump policies: RMIT lecturer 

Enhancing localization of production to boost economic autonomy is a key strategy to mitigate the potential negative effects of the U.S. President Donald Trump’s trade policies, according to Dr. Ha Cam Van, a senior lecturer of economics at RMIT University Vietnam.

Van said the U.S. is Vietnam's largest export market, making key sectors like electronics, textiles, and footwear highly susceptible to increased tariffs.

During Trump’s first term, Vietnam was one of the biggest beneficiaries of the U.S.-China trade war, as many global manufacturers relocated factories from China to Vietnam to avoid U.S. tariffs.

This shift allowed Vietnam to achieve the third-largest trade surplus with the U.S., behind China and Mexico. While Southeast Asia overall benefited from the trade war, Vietnam stood out due to its proximity to China and its business-friendly policies, Van noted.

Under President Joe Biden, the U.S.-Vietnam relationship strengthened further, with an upgrade to a comprehensive strategic partnership. However, Vietnam’s economic success has also made it vulnerable due to its heavy reliance on the U.S., which accounts for nearly 30% of its total exports.

In 2024, Vietnam’s trade surplus with the U.S. reached $104.6 billion, up 25.6% from 2023, positioning Vietnam as a potential target under Trump’s renewed tariff policies, according to Van.

Vietnam has become a key manufacturing base for major U.S. companies like Apple, Google, Nike, and Intel, and plays a critical role in the global supply chain. However, Trump’s trade policy, which emphasizes reducing trade deficits through tariffs and promoting domestic production, could identify Vietnam as a haven for Chinese companies circumventing U.S.-China trade tensions.

"If this occurs, Vietnam could face increased tariffs on its exports to the U.S., following a similar trajectory as China under Trump’s "2.0" trade strategy," said Van.

Moreover, Trump has proposed imposing tariffs of up to 20% on all imports into the U.S. Such a move would increase the price of Vietnamese goods, reduce their competitiveness in the U.S. market, and jeopardize Vietnam’s ability to maintain its market share.

As a result, Vietnam’s export revenue could decline, creating trade balance deficits or reduced surpluses. Comprehensive tariffs on imports proposed by Trump would raise the cost of Vietnamese goods in the U.S., eroding the competitive edge of major export sectors like electronics, garments, and footwear. Vietnamese companies involved in global supply chains may face challenges in maintaining contracts and securing markets, Van added.

Foreign direct investment (FDI) flows could also be impacted by global instability and protectionist U.S. policies. FDI enterprises in Vietnam, particularly those from South Korea and China, might become wary of potential tariffs from a new Trump administration. If such tariffs are implemented, these companies could delay or scale back investments and production in Vietnam, as the advantages of low import taxes for "Made in Vietnam" goods diminish.

South Korea and China are among the largest sources of FDI for Vietnam. A decline in FDI from these countries could significantly hinder industrial development and export growth. Given Vietnam’s reliance on FDI for industrial expansion, reduced capital inflows could slow the country’s economic growth, Van noted.

To counter potential challenges, she suggested, Vietnam should diversify its markets and supply chains, reducing dependence on the U.S. by expanding exports to the EU, Japan, and ASEAN. Additionally, increasing localization of production can enhance economic autonomy. Flexible monetary policies, such as monitoring exchange rates, controlling inflation, and adjusting interest rates, will help stabilize capital flows and support businesses.

Do Ngoc Hung, Vietnam’s trade counselor in the U.S., highlighted that Trump’s second term could significantly affect global trade, investment, and Vietnam-U.S. trade relations due to anticipated economic and foreign policy adjustments.

“To boost exports to the U.S., Vietnamese businesses should collaborate with importers and distributors to explore flexible payment methods and share risks, particularly during early market entry,” Hung advised.

Economist Vo Tri Thanh, former vice head of the Central Institute for Economic Management (CIEM), stressed the importance of agricultural and food exporters investing in cold storage facilities to develop large-scale distribution centers at major ports. Such infrastructure could reduce costs and enable companies to operate more proactively across multiple product groups.

Thanh said that in 2025, external factors such as exports may not be favorable, so the government is looking forward to internal factors. Good connectivity, adaptability, creativity, and strong action are essential for Vietnamese businesses in the current context.