Concerns of Vietnamese businesses in the face of new US tariff policies

The information of increasing import tariffs has been rushing and turning around continuously since US President Donald Trump was elected to a second term has put Vietnamese businesses in the "high alert zone". The Trump administration's implementation of a series of new tariff policies to protect the domestic economy, reduce the trade deficit and boost domestic production has made the already "hard-to-eat" U.S. market even more difficult.

It can be seen that these new tariff policies have not only caused mixed reactions within the United States but also deeply affected trading partners, including Vietnam, one of the largest importers to the United States. In this context, Vietnamese enterprises are facing many concerns and challenges in continuing to maintain market share as well as develop import activities in this market.So what have Vietnamese businesses been doing to find appropriate solutions in the context of new and constantly changing tariff policies from the US?

No small challenge

The possibility of being subject to additional import tax rates is very large

Although in recent tariff policies of the United States, Vietnam is not directly "named" by the additional import tax rates like Canada, Mexico, China or the EU. However, with a huge trade surplus between the US and Vietnam of nearly $110 billion in 2024[1], Vietnam is clearly very likely to become the next direct target of these new tariff measures. Therefore, according to the opinion of some businesses, from enterprises that directly import goods into the US market such as Viet Son Viet Garment Joint Stock Company (Garment Son Viet) or logistics units specializing in supporting businesses to export goods to the US market such as U&i Logistics Joint Stock Company (U&i Logistics), the possibility of the US imposing import tariffs for goods originating from Vietnam is very large in the coming time. In particular, in the context of President Donald Trump's signing of a Memorandum ordering the Office of the United States Trade Representative (USTR) and the Department of Commerce to initiate investigations into unfair or "harmful" trade agreements to the United States by foreign trading partners in order to be able to introduce a fair tariff,  "reciprocity" with these partners[2]. With this strategy, it is very likely that the United States will increase the average tariff on goods imported from Vietnam from 2.2% to 5.1%, equivalent to the tariff that Vietnam will impose on US goods in April. In a worse case, the tariff may increase to more than 10%, [3]which will be a tax rate that directly affects the price of goods, orders from Vietnam's largest export market will decrease, and the value of foreign currency earned from exports will decrease, negatively affecting Vietnam's GDP growth this year.

In addition, according to Mr. Vu Dang Duong, Director of External Relations of U&I Logistics, "the United States is a very demanding market" and in this context, the US market will become more difficult and arduous for Vietnamese businesses.

Supply chain disruptions and increased production costs

According to Mr. Ha Xuan Anh, Chairman of the Board of Directors of Son Viet Garment when sharing with Saigon Economic Magazine at the Talkshow: "Vietnamese businesses are worried about the new tariff policy of the US", he is somewhat more optimistic when he thinks that Trumph's tax policies in the previous term and up to this point are "very beneficial to Vietnam".  when Vietnam's direct competitors in the garment industry such as China, Bangladesh, and India all face disadvantages. Therefore, Vietnamese textile and garment enterprises should improve their internal resources to break through, turning these tariff challenges into opportunities to boost exports. However, according to Mr. Anh, the inherent weakness of Vietnamese textile and garment enterprises is their weak brand and dependence on raw material sourcing from China and India. Therefore, the imposition of high tariffs by the United States on major trading partners such as China, Canada and Mexico could disrupt global supply chains. This leads to an increase in the cost of raw materials and transportation, affecting the product cost of Vietnamese enterprises. In addition, the uncertainty in tariff policy makes it difficult for businesses to predict costs and make long-term business plans. ​

Opportunities for Vietnamese businesses to transform

Sharing at the meeting, although the assessment of the situation of exports to the US market will be volatile in the coming time when the US Government has enough time to comprehensively evaluate major trade policies globally and come up with stronger policies with trading partners with large surpluses such as Vietnam. However, according to the two representatives of the business, besides the challenges and risks in this new context, it is accompanied by opportunities for Vietnamese businesses to change their thinking and export strategies to enter a new stage of development. According to Mr. Duong, Vietnamese businesses can take advantage of the FTAs that Vietnam has signed with other countries to seek and expand to potential markets such as the EU, Japan, South Korea, ASEAN, and South American countries. Understanding and taking advantage of tax incentives from trade agreements is a tool for businesses to open up new opportunities for themselves.

In addition, businesses should also focus on research and development, improving technology and improving product quality that will help businesses increase their competitiveness. The shift from outsourced production to the production of higher value-added products is also a necessary direction when low-cost products are no longer Vietnam's advantage. Business representatives also said that developing close links between domestic enterprises, forming a strong domestic supply chain, helping to reduce dependence on imported raw materials and increase resilience to international market fluctuations is also a solution that businesses should consider.

What solutions for businesses importing goods into the US market

U.S. tariff policies will continue to fluctuate and maneuver. Therefore, businesses need to continuously update information on changes in tariff policies to promptly adjust their business strategies.In addition, strengthening compliance with regulations on the origin of goods to ensure that products meet the standards of origin to avoid the imposition of anti-dumping duties or countervailing duties is a priority for businesses at this time.

Businesses should also note that the application of new technologies, sustainable raw materials, ESG practices, along with improving production processes to reduce costs is one of the long-term strategies to increase competitiveness in the international market for Vietnamese businesses.

At the end of the discussion, Mr. Ha Xuan Anh as well as Mr. Vu Dang Duong both agreed that in this context, businesses need to be proactive to find solutions that are separate and suitable for the situation of their businesses to be able to have effective responses. Along with the initiative of businesses, the support of import and export management agencies and the Government is very important and meaningful for Vietnamese businesses in this context. Because more than anyone else, the competent authority is the official and fast information channel for businesses to give timely and correct instructions in commercial activities. In addition, businesses also hope that with the role of the highest management agency, the Government will take strong action to solve the problem of counterfeit and counterfeit goods, especially goods imported into Vietnam under the guise of Vietnamese goods and exported to the US. Strict enforcement of legal regulations in this field is necessary so that Vietnamese businesses can rest assured to "do the real thing, eat the real thing" and avoid the risks from tax sanctions because Vietnam is considered a "transit station" for goods of other countries to avoid high taxes to enter the US[4].

Read more at: Câu chuyện từ doanh nghiệp may mặc và logistics trước bối cảnh thuế quan mới