Investment funds in Vietnam upbeat about new US tariff

With Vietnam soon reaching a trade agreement with the U.S., major uncertainties have significantly diminished, positively impacting investor sentiment in the stock market, according to investment funds.

On July 2 (Vietnam time), Vietnam's Party chief To Lam and U.S. President Donald Trump announced they have reached a reciprocal trade pact framework. Later on Truth Social, Trump wrote that goods from Vietnam will be subject to a 20% tariff, and it will be 40% for "transshipping".

At the Investor Day event held on Saturday, commenting on the new tariff agreement, Dang Nguyet Minh, head of research at Dragon Capital, assessed that the new 20% tariff is slightly higher than the previous average rate (3-9% before the April 2 tariff announcement), but significantly lower than the initially proposed 46% on April 2. A notable point is the 40% tariff imposed on “transshipping”, she noted.

Dragon Capital’s research showed that transshipped goods contributes nearly zero to domestic value-added, whereas value-added is what significantly contributes to Vietnam’s GDP growth. Therefore, the 40% tariff on “transshipping” has almost no significant impact on the Vietnamese economy, Minh stated.

“The official agreement has eliminated the biggest risk currently facing the economy. Fears of foreign direct investment (FDI) outflows have largely subsided. Moreover, the 20% tariff is considered to have minimal impact and is not substantial enough to trigger economic shifts,” she analyzed

In its latest report, Tundra Fonder AB commented that similar to recent U.S. trade agreements, the real impact will depend on enforcement. However, it also noted that as the largest uncertainty (tariffs) has now seen positive developments, the stock market has responded accordingly with optimism.

Echoing these views, experts from Vietcombank Fund believed that the early trade agreement with the U.S. has greatly reduced uncertainty, thereby positively influencing investor sentiment.

The most encouraging aspect of the deal is the narrowing of the tariff gap between Vietnam and other manufacturing countries to a maximum of 10%, helping to maintain Vietnam’s competitive edge in the eyes of global corporations.

However, the fund also emphasized that the risk surrounding the definition of "transshipped goods" remains significant, especially for the electronics sector and industries with supply chains heavily dependent on other countries.

Since the announcement of the new tariff, Vietnam's stock market has responded positively with continuous gains. After a minor dip of 0.19% on July 3, the VN-Index, which represents the Ho Chi Minh Stock Exchange (HoSE), rose for six consecutive sessions (July 4-11), up nearly 5.5%. The main index is now up 33.2% compared to its lowest point of 2025, recorded on April 9.

The most notable driver of the VN-Index’s strong rally has been foreign investors. Statistics show that from July 2 to July 11 alone, foreign investors recorded eight consecutive net buying sessions on the HoSE, with a total net value approaching VND12 trillion ($459.5 million).

Impact on industries

Vietcombank Fund noted that in a worst-case scenario - if countries like India, Indonesia, and Bangladesh only face a 10% tariff, Vietnam could lose its edge in low-value, simple orders such as T-shirts.

However, the impact on more complex products requiring skilled labor is expected to be limited. In fact, Vietnam could benefit from a shift in orders for these complex products as many other countries are facing much higher rates.

Manufacturing profit margins are not projected to be severely affected since tariffs are calculated on ex-factory prices, which usually account for only 20-30% of the retail price.

As such, the 20% tariff effectively equates to just 4-6% of the retail price and can be absorbed across the value chain, from suppliers and manufacturers to retailers, thus minimizing the impact on producers’ margins and final consumer demand.

In the electronics sector, most products are still exempt from reciprocal tariffs. However, Vietcombank Fund cautioned that these products could become subject to sector-specific tariffs following ongoing trade investigations by U.S. authorities.

The biggest risk lies in the potential labeling of electronic products as “transshipped goods,” as the definition of this term remains ambiguous.

On the positive side, the U.S.’s strict stance on rules of origin could motivate FDI enterprises to expand their local supply chains in Vietnam, thereby positively influencing future FDI inflows into the country.

From their perspective, experts at Saigon Securities (SSI) believed that the industrial real estate sector may face short-term challenges due to tariff uncertainties. However, the long-term outlook remains positive as Vietnam continues to be a favored destination for FDI. Technology and telecommunications, driven by AI and data center expansion, are also viewed positively, despite lingering market caution.

For the industrial and transport sectors, SSI forecast that logistics and shipping trends in the second half of 2025 will largely depend on the outcome of tariff negotiations, particularly on the relative tariff differences among key global trading nations.

The broker emphasized that the absolute tariff rate is less important than Vietnam’s relative position compared to major trading rivals. Therefore, both producers and the market will need to wait for further clarification to reassess competitive advantages.

The deadline for finalizing tariff negotiations has been extended to August 1, providing more room for diplomatic efforts, it added.