Vietnam could see nearly all of its exports to the United States—valued at over $142 billion last year—impacted by new tariffs set to take effect on Wednesday. These exports make up around 30% of the country’s GDP.
During Donald Trump’s first term, Vietnam benefited from the U.S.-China trade war. However, officials and businesses are now uncertain about how the new tariffs will affect the economy. With a trade surplus of $123.5 billion with the U.S., Vietnam meets multiple criteria for Trump’s reciprocal tariff policies.
Potential Measures to Avoid Tariffs
Tariffs and Trade Barriers
Vietnam has higher average tariffs than the U.S. and imposes a value-added tax on goods. However, some economists argue that its effective tariff rates in bilateral trade are lower.
The Trump administration has yet to clarify which tariff rates it will use to justify new levies. So far, Washington has primarily relied on average tariff rates as a benchmark.
In response, Vietnam announced it would reduce tariffs on several imports, including liquefied natural gas (LNG) and automobiles. It has also committed to easing non-tariff barriers. A 2024 report by the U.S. Trade Representative listed Vietnam’s restrictive trade policies, such as import bans, complex registration requirements, and sanitary regulations.
Defense and Technology Cooperation
Vietnam is negotiating with U.S. defense companies to buy military equipment. Talks have advanced on purchasing Lockheed Martin’s C-130 Hercules transport planes, according to officials.
Additionally, the government has approved a trial launch of SpaceX’s Starlink satellite internet service, a move that benefits Elon Musk, a Trump ally. While Vietnam maintains control over Starlink’s operations, the approval helps navigate strict foreign ownership rules.
Aircraft Purchases
Vietnamese budget airline VietJet has a long-standing agreement to buy 200 Boeing 737 MAX jets, a deal originally signed in 2016. Though deliveries have yet to begin, the airline has expressed interest in expanding the agreement.
Vietnam Airlines has also signed an agreement to potentially purchase 50 Boeing 737 MAX jets.
Energy Imports
Vietnam has explored purchasing U.S. LNG to support its growing energy sector. In March, officials signed non-binding agreements to buy U.S. energy equipment and fuel.
The country is also considering reviving its nuclear power program and is seeking suppliers for nuclear technology.
Agricultural Trade
Vietnam has signaled its willingness to import more U.S. agricultural products. However, this is unlikely to significantly reduce the trade imbalance, as Vietnam imported only $3.4 billion worth of U.S. farm products last year.
Transshipment and Steel Trade
Vietnam has faced long-standing allegations of being a hub for Chinese goods re-exported to the U.S. Some products, like solar panels, have already been targeted by U.S. sanctions.
In response, Vietnam imposed temporary anti-dumping duties on Chinese steel in February. During a March visit to Washington, its trade minister pledged to crack down on fraudulent transshipment.
Deportations
Vietnam has begun issuing travel documents for its nationals detained in the U.S. for repatriation. A U.S.-based lawyer said Hanoi had agreed to accelerate processing in response to American threats of tariffs and visa sanctions. Historically, Vietnam has been reluctant to accept deportees from the U.S.
Monetary Policy
During Trump’s first term, the U.S. Treasury labeled Vietnam a currency manipulator. While it is now on a watchlist, concerns remain.
Recently, Vietnam’s central bank has allowed its currency, the dong, to weaken against the U.S. dollar. Analysts believe this reflects the government’s willingness to maintain strong economic growth, even if it results in a weaker currency. However, the central bank insists it will monitor and adjust policies based on Trump’s economic stance.
Golf Diplomacy
The Trump Organization has agreed to develop a $1.5 billion golf resort in Vietnam, according to its local partner. The company has also expressed interest in additional projects.
Conclusion
As Trump’s tariffs loom, Vietnam is scrambling to mitigate the potential economic fallout. While some measures may help ease tensions, the full impact of the new trade policies remains uncertain.
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