Vietnam Faces Major Setback as US Tariffs Take Effect

Vietnam, once considered a key beneficiary of shifting global trade dynamics, now faces significant economic challenges after the US imposed steep tariffs on its exports, Bloomberg reports.

The decision, announced by President Donald Trump during the “Liberation Day” ceremony, has sparked concerns about Vietnam’s economic growth and its long-term trade relationship with the US.

For years, Vietnam pursued a growth strategy that made it an attractive destination for foreign investors. By welcoming supply chains, improving infrastructure, and combating corruption, the country became a key player in global manufacturing. As US-China tensions escalated, Vietnam benefited from companies looking to diversify their supply chains, earning the reputation of a “trade-war winner.”

However, Vietnam’s rapid economic rise also put it under greater scrutiny. Similar to past allegations against China, Vietnam was accused of keeping its currency undervalued, maintaining opaque decision-making processes, and restricting foreign investment in certain sectors. These concerns contributed to the US decision to impose a 46% tariff on Vietnamese exports—the highest among the recent trade penalties.

The tariffs are expected to deal a significant blow to Vietnam’s economy, which heavily depends on exports. According to Bloomberg Economics, over 25% of Vietnam’s GDP is tied to US trade, and exports make up roughly 90% of its total economy.

Some of the industries at greatest risk include:

• Textiles and Footwear: Major global brands like Nike, Adidas, and Uniqlo rely on Vietnam for manufacturing. Many textile companies in Ho Chi Minh City now face potential closures.

• Technology and Electronics: Companies such as Intel and Apple have invested heavily in Vietnam, but new tariffs could impact their operations.

• Manufacturing and Supply Chains: Vietnam’s role as a supply chain hub is now uncertain, especially as US officials worry about Chinese influence in the region.

Vietnam’s trade surplus with the US has grown substantially in recent years, drawing criticism from Washington. In late 2020, the US Treasury Department labeled Vietnam a currency manipulator, and concerns about cheap imports and trade imbalances have persisted. While Vietnam recently cut tariffs on various imports in an attempt to ease tensions, it was not enough to prevent the latest US measures.

Trump’s decision to impose tariffs on multiple Southeast Asian nations—including Cambodia, Thailand, Malaysia, Indonesia, and the Philippines—has left many in the region questioning US trade policy. While Singapore received a lower tariff rate of 10%, Vietnam was hit particularly hard, despite being one of the region’s fastest-growing economies.