Don’t panic over US’s 46% tariff on Vietnam goods: experts

The U.S.’s 46% tariff imposition on imports from Vietnam, effective from April 9, is not as alarming as it seems, as the situation will ultimately depend on the negotiations between the two parties, said experts.

However, they noted investors should manage their portfolios and focus more on domestic manufacturing sectors.

46% is just a number, reality lies on negotiation table

U.S. President Donald Trump on Thursday declared a national economic emergency and announced tariffs on all countries. He raised the average tariff to over 20%, which has had a widespread impact on most economies.

Among them, the U.S. applied a 46% tariff on goods imported from Vietnam, while it is 34% for China. However, the U.S. also mentioned that there are opportunities for negotiations.

This news has had a significant impact on stock investor sentiment. Closing the morning session of Thursday, the VN-Index, which represents the Ho Chi Minh Stock Exchange (HoSE), lost 82.28 points, or 6.24%, to 1,235.55, with up to 505 stocks declining. The trading volume on the major bourse hit VND31.24 trillion ($1.21 billion), with all stock groups experiencing declines.

According to Pham Luu Hung, chief economist at leading broker Saigon Securities (SSI), the U.S. has released a trade estimate report with eight pages concerning Vietnam. Most of the issues raised have been addressed by Vietnam, such as opening more for agricultural products, intellectual property issues, the Ministry of Industry and Trade’s working sessions on various products that the U.S. has concerns about, and a decree on strategic trade management. The Trump administration has also acknowledged that Vietnam is handling U.S. concerns most effectively.

“What we need to watch is the upcoming trip of Deputy Prime Minister Ho Duc Phoc to the U.S. to see how the U.S. responds. Over the next week, there will be negotiations. Investors should not panic over the figure of 46%, or later 36%, 26%. I think it’s just a number because the real issue is on the negotiation table,” he said.

According to VPBank Securities (VPBankS), the U.S. tariff imposition will have a far-reaching impact on Vietnam’s economy in various aspects such as imports and exports, economic growth, exchange rates, inflation, and foreign direct investment (FDI).

The U.S. is Vietnam’s largest export market, accounting for about 28-30% of total export turnover. The 46% tariff will significantly increase the prices of Vietnamese goods in the U.S., reducing competitiveness compared to those from countries like China, India, or Mexico. Key industries such as textiles, leather shoes, electronics, wood, and seafood will be heavily affected.

According to the broker, exports are a key driver of Vietnam’s economic growth, contributing 1.5%-2% to GDP annually. If exports to the U.S. decrease by 20-30%, GDP growth this year could drop by 0.5-1%. Therefore, economic growth depends on the ability to stimulate domestic consumption and public investment. On the other hand, the U.S. tariff could cause inflation to rise again, putting pressure on the exchange rate.

VPBankS put forth two potential economic scenarios. The pessimistic scenario, if effective countermeasures are not implemented, will see a sharp decline in exports, GDP growth below 6%, exchange rates exceeding VND26,000 per USD, inflation over 5%, and FDI slowing down. Exporting businesses will suffer, and domestic consumption will contract.

In the optimistic scenario, if Vietnam successfully negotiates a reduction in tariff or is exempted for certain products, and at the same time strengthens alternative markets such as the EU, Japan and ASEAN, increases public investment, and stimulates domestic consumption, GDP growth could remain at 6.5-7%, inflation under 5%, and stable FDI.

VPBankS forecast that Vietnam’s GDP growth in 2025 could decrease by an average of 1.78% annually over the next five years (according to Bloomberg’s forecast, Vietnam’s GDP could drop by about 8.9% by 2030, which means an annual reduction of 1.5-2%). The forecast for 2025, originally 7-8%, could fall to around 5-6.5% or lower. This will depend on the ability to stimulate domestic consumption and public investment.

In conclusion, VPBankS believed that the 46% U.S. tariff is a significant shock, but its impact will depend on Vietnam’s policy response. If Vietnam acts proactively and flexibly, it can minimize the damage and find opportunities in challenges.

Similarly, analysts from Maybank Securities Co., Ltd. held that the 46% retaliatory tariff imposed by the U.S. will have negative impacts on Vietnam’s economy and stock market. However, according to U.S. Treasury Secretary Scott Bessent, this tariff could be adjusted through negotiations.

The Vietnamese government has shown cooperation and proactivity in addressing U.S. concerns, including recent reductions in MFN (Most Favored Nation) import tariffs on strategic items such as cars, wood, LNG, and agricultural products, they said.

In addition, to promote negotiations, measures such as increasing U.S. goods purchases, reducing tariffs, facilitating U.S. businesses’ operations in Vietnam, and opening the agricultural market for U.S. products could be considered, they added.

Stock investors advised to manage risks

Pham Luu Hung, chief economist of SSI, suggested that in the current context, investors should manage their portfolio risks. If the portfolio is highly risky, they should restructure and focus more on domestic manufacturing sectors or those with a high margin ratio.

Nguyen The Minh, head of research and development at Yuanta Securities Vietnam, commented that in the Trump 1.0 era, strong volatility had occurred and the Vietnamese stock market quickly stabilized afterward. In Trump’s approach to managing the U.S. economy and announcing tariffs, he only set the range and did not specify the exact tariff to be imposed. All countries still have multiple rounds of negotiations to reach an agreement.

The expert believed that the VN-Index will be affected in the short term, but its decline is expected to gradually narrow.

Minh advised investors to limit panic selling, except when under margin pressure. Panic selling would be detrimental to risk management. Additionally, investors should keep a close watch on the banking and securities sectors, as these are leading sectors that may benefit in the market. The aluminum and steel sectors can also be considered, as they are not affected by this tariff.

Truong Hien Phuong, senior director of KIS Vietnam Securities, also expected the VN-Index’s decline to soon slow down and find a balance point. Based on technical analysis, when the major index drops sharply or enters an oversold zone, it presents buying opportunities for medium- and long-term perspectives.

“With the stock market dropping sharply while the companies’ EPS (earnings per share) remains the same, the impact of tariff policies will take 3-6 months to be fully realized. I believe the P/E (price to earning) ratio of many stocks is currently very attractive,” he concluded.