US's hefty 46% tariff worries Vietnamese exporters

Vietnamese exporters have voiced concern that if the 46% tariff rate announced by President Donald Trump Wednesday is imposed, they will face massive difficulties.

The tax rate for Vietnam, effective from April 9 as part of a new wave of global impositions announced Thursday, is among the highest, only after Laos (48%) and Madagasca (47%).

The formula is sowing fears among many Vietnamese businesses that export to the U.S.

Tran Van Linh, chairman of Thuan Phuoc Seafood and Trading Corporation in the central city of Da Nang, said the U.S. has long been a tough market for Vietnam's shrimp sector due to the fierce competition from Ecuador, India, and Indonesia.

Additionally, the U.S. has levied anti-dumping and countervailing duties on Vietnam. As a result, shrimp exports to the U.S. are mainly to maintain market share rather than generating profit.

“The 46% reciprocal tariff would make it impossible for Vietnam to export, no matter the effort. No one has the financial capacity to cover such losses,” he said.

Linh described it as a “warning shot” from the U.S., prompting its trade partners to reassess longstanding tariffs imposed on American goods.

He suggested that Vietnam, an open economy driven by strong exports, review and adjust its policies, making them more suitable. "The government should negotiate with the U.S. to lower tariffs and provide support for businesses."

Le Hoang Khanh Nhut, CEO of Danang Rubber JSC, listed on the Ho Chi Minh Stock Exchange as DRC, said all of his company’s orders to the U.S. are temporarily halted, pending clearer information after April 9.

Customers need accurate details about the tariff on automobile tires before making a decision, he explained.

"If the 46% tariff goes into effect as announced, my company will face serious challenges, with export revenue likely to drop by about 35-40%," Nhut said.

He further noted that if the tariff is imposed on tires from Vietnam, it would be hard to sustain the U.S. market.

Whether or not the levy will be applied, U.S. customers will shift their purchasing habits from FOB (free on board) to DDP (delivered duty paid), thus transferring the risk to sellers, he believed.

The CEO feared that the constant changes in U.S. policy would greatly impact his company’s strategy, with substantial risks of additional costs if the DDP method continues.

In response to the situation, Nhut called for support from shipping lines to extend the container storage period at the yard without incurring additional fees until more clarity is provided on the tariff imposed on tires from Vietnam.

He also suggested setting aside a contingency fund to cover potential costs arising from policy changes or random US customs investigations.

He said strengthening cooperation with various shipping lines would help mitigate risks in case the U.S. imposes sanctions on specific shipping lines from certain countries.

Furthermore, efforts should be made to increase tire sales in other markets, such as Brazil, Asia, and the EU, while considering bilateral collaboration to reduce the risk of future tariff impositions in these markets.

Le Minh Thien, director of Hoang Hung Co. in the south-central province of Binh Dinh, which is operating in the wood industry, said the U.S. tariff is based on trade deficit, with specific tariff rates applied to each industry.

It is still unclear what specific tariff the U.S. will impose on the wood industry, but once in place, it will have a strong impact. Businesses will be unable to cope unless the government negotiates to reduce the tariff, he said.

Prime Minister Pham Minh Chinh has requested the immediate establishment of a rapid reaction force, following President Donald Trump announcing that the U.S. will impose reciprocal tariff of 46% on goods imported from Vietnam. The team will be headed by Deputy Prime Minister Bui Thanh Son.

"Vietnam wants the U.S. to have more suitable policies given the good relations between the two countries, and the conditions and circumstances of Vietnam as a developing country which must continue to overcome the severe and prolonged consequences of many years of war," he noted at a meeting with relevant authorities on Thursday morning.

According to Vietnam Customs, in 2024, Vietnam exported goods worth $119.5 billion to the U.S. and spent $15.1 billion on imports from this economy. There were 15 items with billion-U.S. dollar export turnovers, of which three dominant groups were computers and components ($23.2 billion), machinery and equipment ($22 billion), and textile ($16.2 billion).

Phones, wood, and footwear were also the items that recorded great export values, in the range of $8.3-9.8 billion. Agricultural products also made important contributions, such as cashew nuts and seafood with $1.15 billion and 1.83 billion, respectively, and coffee with nearly $323 million.