Vietnam faces US tariff shock: What's next for exporters and the broader economy?

By Dr Chu Thanh Tuan
Mon, April 7, 2025 | 1:14 pm GMT+7

Vietnam finds itself at the epicenter of a trade policy earthquake with President Trump's policies, but with coordinated action and long-term vision, the country could turn crisis into opportunity, wrote Dr Chu Thanh Tuan, associate program manager of undergraduate business programs at RMIT University Vietnam.

Dr Chu Thanh Tuan, associate program manager of undergraduate business programs at RMIT University Vietnam. Photo courtesy of RMIT.

Dr Chu Thanh Tuan, associate program manager of undergraduate business programs at RMIT University Vietnam. Photo courtesy of RMIT.

How the latest U.S. tariff framework impacts Vietnam

U.S. President Donald Trump on Wednesday announced a sweeping tariff framework during what the White House called a “Liberation Day” proclamation. The new policy will impose a baseline 10% tariff on nearly all countries effective April 5, followed by targeted increases of up to 30-40% from April 9, with a potential 46% rate applied to Vietnamese goods.

This move represents the most protectionist shift in U.S. trade policy in recent memory, and Vietnam stands directly in the firing line.

The direct impact on Vietnam is significant. The country’s largest export sectors, including textiles and garments, electronics, footwear, seafood, and furniture, are all heavily reliant on the U.S. market. With nearly 30% of Vietnam’s total exports destined for American consumers, the introduction of tariffs ranging from 10% to 40% could erode price competitiveness, trigger order cancellations, and compel businesses to either absorb margin losses or shift production elsewhere.

However, the consequences are not confined to direct exporters. This morning, a neighbour of mine, a CEO of a yarn manufacturing company that does not export to the U.S., said: “We don’t ship to America, but this tax is crushing our industry.”

His concern reflects broader anxiety across the business community – that tariffs imposed on Vietnamese exports to the U.S. may trigger disruptions throughout supply chains, raise input costs, and reduce demand across a wide range of domestic sectors.

These compounding effects culminated in a sharp market reaction. On the morning of the announcement, the VN-Index dropped nearly 80 points, equivalent to around 6% by 10:50 a.m., highlighting just how deeply these tariff measures are shaking not only exporters, but also broader investor sentiment and business confidence across industries.

The indirect impacts are just as concerning. They include supply chain disruptions, as U.S. buyers reduce orders or demand price renegotiations; reduced foreign direct investment, particularly from manufacturers focused on export-driven growth; ripple effects on domestic sectors such as logistics, finance, packaging, and compliance and currency volatility, stemming from investor uncertainty and macroeconomic pressure.

As these challenges unfold, Vietnam now faces a critical juncture which demands a strategic and coordinated response to safeguard its economy and maintain its position in global trade.

Vietnam’s strategic response: What should be done now?

In light of the escalating impacts of the U.S. tariff measures, Vietnam is now navigating a tightrope. The country’s record $123.5 billion trade surplus with the U.S. in 2024 makes it a prime target for the so-called “reciprocal” tariffs. While Vietnam has benefitted from supply chain shifts out of China, this very success has also drawn increased scrutiny.

Importantly, Trump’s tariff decisions are driven not only by economic considerations but also by political messaging – a demonstration of strength aimed at his domestic base. Vietnam’s response, therefore, must be both tactical and strategic, spanning immediate diplomatic efforts, mid-term restructuring, and long-term institutional reform.

About short-term actions, Vietnamese interprises should speed and coordination to mitigate the immediate fallout, both government and businesses must act quickly and cohesively. The following actions should be prioritized in the coming days and weeks.

Secondly, Vietnamese firms should immediate diplomatic efforts. Last Thursday, Prime Minister Pham Minh Chinh chaired an urgent meeting with leaders of key ministries in response to the U.S. decision to impose a 46% tariff on Vietnamese goods.

At the meeting, he ordered the formation of a rapid response task force and directed relevant ministries to coordinate and collect input from major exporters. In the upcoming meetings led by Deputy Prime Minister Ho Duc Phoc during his current visit to the U.S., as well as in subsequent inter-ministerial discussions, it is crucial for Vietnam to emphasize its strategic economic role for U.S. companies operating locally and to propose targeted mitigation measures by sector to prevent widespread fallout.

In the medium term, Vietnam should strengthen its trade ties within the CPTPP, EVFTA, and RCEP to tap into large consumer markets with preferential access. Countries such as Japan, Canada, and the EU present strong alternatives to the U.S. market. Besides that they should adjust production chains: Increasing local value-added steps and reducing dependence on intermediate goods from China – which are often flagged in U.S. customs inspections – will be critical. Upgrading origin tracing systems and investing in compliance technology will support this effort.

Finally, long-term resilience will require institutional reform to ensure Vietnam is better equipped to handle future global trade tensions. Two areas should be prioritized, including customs enforcement and transparency. Vietnam must strictly enforce rules of origin to prevent the transshipment of Chinese goods through its territory. U.S. trade authorities are highly sensitive to this issue, and failure to act could result in further penalties.

Vietnam should establish a trade risk response unit that involves both public and private sectors. This team would monitor developments, model economic impacts, and facilitate coordinated policy responses in a timely and strategic manner.

Integrating these institutional mechanisms will allow Vietnam to shift from reactive policymaking to proactive, forward-looking governance. This enables the country not only to weather the current storm, but also to strengthen its role in the global trading system.

Understanding the shock and responding with strategy

To formulate an effective response, it is essential to view this tariff escalation through a strategic lens. President Trump’s typical approach is to lead with shock – announcing steep tariffs of 30%, 40%, or even 60% – and then use those threats as leverage to negotiate more favourable terms. The real aim is often to make a 10% baseline appear moderate and acceptable in comparison.

Recognizing this tactic is critical. Rather than reacting with panic, Vietnam must respond with clear-eyed, coordinated strategy. Delays or hesitations could be interpreted as passivity, weakening the country’s negotiating position. Instead, Vietnam should act early, assertively and constructively – pursuing exemptions or reductions through targeted diplomacy and mutually beneficial trade concessions.

This moment presents more than just a test of resilience; it is also a potential turning point. Vietnam is entering one of its most complex trade environments in decades. Yet with the right approach, this disruption could serve as a catalyst for long-term transformation.

A strategic path forward should therefore include:

· Government-led diplomacy at the highest level

· Private sector agility and risk planning

· Public messaging to both US and domestic audiences

· Long-term reforms to improve trade transparency and institutional capacity

If these elements are aligned and implemented decisively, Vietnam can not only weather the storm but also emerge stronger, more competitive, and better positioned for a diversified and sustainable future.

Comments (0)
  • Read More
Maintaining market status upgrade a bigger challenge: official

Maintaining market status upgrade a bigger challenge: official

Vietnam's stock market status will be upgraded by FTSE Russell from "frontier" to "secondary emerging" from September 21 next year, but continued reform is critical as the bigger challenge is to maintain the new classification, said a market watchdog official.

Finance - Sat, October 18, 2025 | 1:30 pm GMT+7

HCMC partners with Nasdaq to develop int’l financial center

HCMC partners with Nasdaq to develop int’l financial center

The Finance Department of Vietnam’s southern metropolis Ho Chi Minh City has signed an MoU with the U.S.-based stock exchange Nasdaq on the development of an international financial center (IFC).

Top News - Sat, October 18, 2025 | 11:56 am GMT+7

Vingroup plans $325 mln issuance of international bonds

Vingroup plans $325 mln issuance of international bonds

Vietnam's leading private conglomerate Vingroup (HoSE: VIC) has announced a board of directors resolution to issue $325 million worth of international bonds, with a five-year term and a yield of 5.5% per year.

Companies - Sat, October 18, 2025 | 10:26 am GMT+7

Vietnam raises personal income tax deductions by over 40%

Vietnam raises personal income tax deductions by over 40%

The Standing Committee of Vietnam’s National Assembly, the country's legislature, on Friday approved a resolution on adjusting personal income tax (PIT) deductions, marking a significant increase of over 40% from current levels.

Economy - Sat, October 18, 2025 | 9:11 am GMT+7

EVN subsidiary spreads the spirit of solidarity, compassion

EVN subsidiary spreads the spirit of solidarity, compassion

The employees of National Power Transmission Corporation (EVNNPT) came together in an inspiring display of unity and compassion in October, each donating one day’s salary to support and express solidarity with the people of Cuba - a nation that has long shared a special friendship with Vietnam.

Companies - Sat, October 18, 2025 | 9:00 am GMT+7

Property fever prompts tighter inspection in central Vietnam's economic hub Danang

Property fever prompts tighter inspection in central Vietnam's economic hub Danang

Chairman of Danang city People’s Committee, Pham Duc An, has ordered a comprehensive inspection and audit of land valuation and auction activities to prevent and address market manipulation that could destabilize the local property market.

Real Estate - Sat, October 18, 2025 | 8:00 am GMT+7

Vietnam mulls opening door for private investment in small modular reactors

Vietnam mulls opening door for private investment in small modular reactors

Vietnam’s Ministry of Industry and Trade has drafted a parliamentary resolution that, for the first time, would allow private companies to participate in the development of small modular nuclear reactors (SMRs).

Energy - Fri, October 17, 2025 | 4:37 pm GMT+7

Kido seeks buyer for remaining 49% stake in frozen food affiliate

Kido seeks buyer for remaining 49% stake in frozen food affiliate

Kido Group (HoSE: KDC), a leading food company in Vietnam, has approved a plan to divest the firm's remaining 49% stake in its affiliate Kido Frozen Food JSC (Kido Foods).

Companies - Fri, October 17, 2025 | 4:25 pm GMT+7

Le Ngoc Quang appointed Danang city's Party chief

Le Ngoc Quang appointed Danang city's Party chief

Le Ngoc Quang, a Party Central Committee member and Party chief of Quang Tri province, has been appointed Party chief of Danang for the 2025-2030 term - the highest position in the city, central Vietnam's economic hub.

Politics - Fri, October 17, 2025 | 4:17 pm GMT+7

T&T Group seeks to reshape north-central Vietnam’s urban landscape with major projects

T&T Group seeks to reshape north-central Vietnam’s urban landscape with major projects

Multi-sector conglomerate T&T Group is developing a model eco-urban complex in Ha Tinh province and plans to build a massive 236-hectare urban area in neighboring Nghe An, with an aim to reshape north-central Vietnam's urban landscape.

Investing - Fri, October 17, 2025 | 2:44 pm GMT+7

Toyota plans $359 mln plant expansion in northern Vietnam

Toyota plans $359 mln plant expansion in northern Vietnam

Toyota Motor Vietnam (TMV) plans to invest about VND9.46 trillion ($359.2 million) in the first phase of its plant expansion project in Phu Tho province.

Investing - Fri, October 17, 2025 | 2:09 pm GMT+7

PVI Insurance sees 9-month profit before tax more than doubling

PVI Insurance sees 9-month profit before tax more than doubling

PVI Insurance has reaffirmed its position as the No. 1 non-life insurer in Vietnam, with total revenue increasing nearly 1.4 times in the first nine months of 2025 and pre-tax profit more than doubling year-on-year - surpassing its full-year targets for both revenue and profit.

Companies - Fri, October 17, 2025 | 9:08 am GMT+7

Vingroup to develop 4,600ha coastal urban project in northern Vietnam

Vingroup to develop 4,600ha coastal urban project in northern Vietnam

A consortium of Vingroup (HoSE: VIC) and its real estate arm Vinhomes (HoSE: VHM) will develop a 4,600-hectare coastal urban complex in Ha An ward, Quang Ninh province, following local authorities’ approval of a zoning plan.

Real Estate - Fri, October 17, 2025 | 8:30 am GMT+7

Indonesia resumes int’l carbon trading after 4-year hiatus

Indonesia resumes int’l carbon trading after 4-year hiatus

Indonesian President Prabowo Subianto has issued a new decree to restart international carbon emissions trading after a four-year hiatus.

Southeast Asia - Thu, October 16, 2025 | 9:23 pm GMT+7

Investors seek 2-year delay for $2.56 bln LNG power project in northern Vietnam, citing equipment hurdles

Investors seek 2-year delay for $2.56 bln LNG power project in northern Vietnam, citing equipment hurdles

Investors of a $2.56 billion LNG-fired power plant in Hung Yen province have proposed delaying the project’s commercial operation schedule by two years due to difficulties securing key equipment.

Energy - Thu, October 16, 2025 | 9:04 pm GMT+7

Vietnam to soon raise taxpayers' personal deduction: official

Vietnam to soon raise taxpayers' personal deduction: official

The personal income tax deduction in Vietnam is "very likely" to increase to VND21.7 million ($823,940) per month, including VND15.5 million (588,530) for the taxpayer and VND6.2 million ($235,410) for each dependent.

Finance - Thu, October 16, 2025 | 6:25 pm GMT+7