Scenarios and Possibility of Tariffs Imposed on Vietnam
With Vietnam being the United States’ 8th largest goods trading partner (with total two-way trade reaching USD 149.7 billion in 2024, accounting for 2.8% of the U.S.’s total goods trade); the 6th largest exporter to the U.S. (USD 136.6 billion, accounting for 4.2% of total U.S. goods imports); and the 3rd largest trade surplus holder with the U.S. (USD 123.5 billion in 2024), the possibility of tariffs being imposed on Vietnam cannot be ruled out, given the perspective that international trade should be more balanced and fairer—especially in light of recent policy decisions by President Donald Trump.
The research team has outlined three potential scenarios for the likelihood of tariffs being imposed on Vietnam:
(i) Scenario 1 (Baseline, 50% probability)
The U.S. could impose reciprocal tariffs on Vietnamese imports, matching the rates Vietnam applies to U.S. imports. According to the World Trade Organization (WTO), the U.S. could raise the average tariff rate on imports from Vietnam from the current 2.2% (weighted average) to 5.1% (the rate Vietnam applies to U.S. goods).
In this case, the additional tariffs could amount to approximately USD 4 billion—a significant figure unless Vietnam proactively reduces tariffs on U.S. imports. If Vietnam lowers its tariffs, the expected reduction in U.S. tariff revenue would be around USD 530 million, assuming Vietnamese imports from the U.S. increase by 20% in 2025.
Such reciprocal tariff measures would likely not take place immediately, as the U.S. would need to evaluate the impact across more than 200 global trade partners and various product lines. However, countries with significantly higher reciprocal tariffs than the U.S., such as India, South Korea, and Brazil, may face earlier implementation.
(ii) Scenario 2 (Negative, 25% probability):
The U.S. could impose a flat 10% tariff on imports from Vietnam (instead of the current 3.3% simple average or 2.2% weighted average), similar to measures previously announced by President Trump for other countries.
If this occurs, Vietnam’s exports to the U.S. could decrease by 3–5% in 2025, with the growth rate slowing to 15–17% (compared to the current 20% growth rate for the U.S. market). Other export markets would likely not adjust quickly enough to offset the loss, potentially reducing Vietnam’s overall export growth by 1.5–2 percentage points. GDP growth could also decline by 0.2–0.3 percentage points in 2025, with the following year potentially seeing an even larger drop if the tariffs remain in place for a full 12 months (as opposed to only nine months in 2025, assuming the tariff takes effect from Q2).
(iii) Scenario 3 (Positive, 25% probability):
The U.S. does not impose additional tariffs or only increases tariffs on specific Vietnamese goods (such as steel and aluminum), applying rates similar to those imposed on other countries.
In this scenario, Vietnam would compete fairly with other countries exporting similar products. Additionally, Vietnam could take advantage of emerging opportunities to meet or even exceed its export growth targets.
Additional Impacts
Beyond the effects on exports and growth, a U.S. tariff hike could also lead to higher prices, increased inflationary pressure, and currency exchange rate fluctuations. Financial markets, including stock and currency markets, could become more volatile—similar to trends seen in other affected countries. This would require Vietnam to adopt more agile, proactive, and timely policy measures.
Impacts on Key Export Sectors
In this report, the research team focuses on evaluating five major sectors (accounting for 64.3% of Vietnam’s total export turnover to the U.S. in 2024), including:
Electronics: Products such as computers, electronic devices and components, phones and accessories, cameras, camcorders, and related parts (accounting for 28.6% of Vietnam’s total exports to the U.S.).
Textiles, Garments, and Footwear (accounting for 21.9%).
Wood and Wood Products (accounting for 7.6%).
Agriculture, Fisheries, and Seafood (accounting for 3.5%).
Steel and Aluminum (accounting for 2.7%).
The automotive and pharmaceutical sectors were not considered in this analysis, as they are not yet key export sectors for Vietnam. In 2024, Vietnam’s exports of automobiles and pharmaceuticals to the U.S. reached only USD 168.7 million and USD 50.2 million, respectively, accounting for just 0.14% and 0.04% of Vietnam’s total exports to the U.S.
(i) Electronics Sector
This sector is likely to be minimally affected due to the large scale of production, high technology levels, and heavy reliance on foreign direct investment (FDI). The total export turnover of electronic products (including computers, phones, cameras, camcorders, and components) to the U.S. in 2024 reached USD 34.23 billion, representing a 32.3% increase, accounting for 28.6% of Vietnam’s exports to the U.S. and 22.1% of Vietnam’s total electronics export value.
However, Vietnam’s electronics sector mainly relies on FDI companies (such as Samsung, Intel, and LG), as this is a high-tech field with significant upfront investment costs and requires a highly skilled workforce. Therefore, the likelihood of shifting production chains away from Vietnam due to U.S. tariffs is low (although multinational corporations could adjust their supply chains).
In the semiconductor manufacturing sector, Vietnam currently only participates in assembly, testing, and packaging (ATP) rather than full-scale production. As a result, the U.S. tariffs would not have an immediate significant impact on this industry. However, potential future tariff hikes could negatively influence decisions regarding future semiconductor manufacturing investments in Vietnam.
Export Projections Under Different Scenarios:
Baseline Scenario (10% tariff increase):
Exports in this sector could reach USD 41–42 billion in 2025, representing a growth of 15–20%—only half the growth rate of the previous year. The total additional import tax burden for this sector could amount to around USD 4.1–4.2 billion.Negative Scenario:
Exports are projected to grow by only 10–15% due to the impact of higher tariffs.Positive Scenario:
Export growth could reach 20–25% if tariffs are not imposed or are only applied to specific product categories.
In all three scenarios, due to the durable nature of electronic goods, any price increase caused by higher tariffs would directly affect demand (leading to a decline). This would negatively impact export performance for all countries, including Vietnam.
(ii) Textiles, Garments, and Footwear Sector:
This sector would be significantly affected due to high international competition, ease of shifting production chains, and high price sensitivity. In 2024, Vietnam’s exports of textiles, garments, and footwear to the U.S. reached USD 26.23 billion (a 13.3% increase compared to the previous year), accounting for 21.9% of Vietnam’s total exports to the U.S. and 40.4% of the country’s total textile and footwear export turnover.
In the U.S. market, Vietnam primarily competes with Bangladesh, Cambodia, China, India, Italy, and Indonesia. Currently, this sector is benefiting from production shifts out of China, and in the long term, Vietnam is expected to gradually gain market share from China thanks to its competitive advantages:
- A robust port system and favorable geographic location.
- The ability to produce high value-added products.
- Fast delivery times and flexible production capabilities.
However, if higher tariffs are imposed on Vietnamese exports to the U.S. (which accounts for 40.4% of the sector’s total export turnover), the industry will face significant challenges as costs rise and trade barriers increase. Additionally, these products are durable goods with high price sensitivity, meaning that in times of economic difficulty or uncertainty, consumers tend to cut back on spending, reducing demand for these goods.
Export Projections:
- Baseline Scenario (10% tariff increase): Exports to the U.S. could reach USD 28–29 billion in 2025 (a 7–11% increase). The sector’s additional import tax burden would be approximately USD 2.8–3 billion.
- Negative Scenario: Export growth could slow to just 3–5%.
- Positive Scenario: Export growth could reach 10–13% if tariffs remain unchanged or are only applied to certain products.
(iii) Wood and Wood Products Sector:
This sector would face moderate impacts due to a relatively stable supply chain and strong U.S. demand. In 2024, Vietnam’s wood and wood products exports to the U.S. reached USD 9.06 billion (a 24% increase), accounting for 7.6% of Vietnam’s total exports to the U.S. and 54.2% of the country’s total wood exports.
Vietnamese wood products mainly compete with suppliers from Canada, China, Brazil, and Mexico in the U.S. market. The sector is already facing challenges such as:
- Legal wood sourcing requirements.
- Risks of trade fraud.
- Stringent rules of origin compliance.
If tariffs are imposed, the likelihood of production shifting away from Vietnam is moderate, as supply chains are relatively stable and U.S. demand remains strong. However, competition from regional rivals like Indonesia, Thailand, and Malaysia (which could face lower tariffs) would increase. Similar to textiles and footwear, these are durable goods, meaning demand could drop in times of economic difficulty due to high price sensitivity.
Export Projections:
- Baseline Scenario (10% tariff increase): Exports could reach USD 10–10.5 billion in 2025 (a 10–15% increase). The additional import tax burden would be over USD 1 billion.
- Negative Scenario: Export growth could slow to 5–10%.
- Positive Scenario: Export growth could reach 15–20% if tariffs remain low or unchanged.
(iv) Agriculture, Fisheries, and Seafood Sector:
This sector is expected to be less affected due to the essential nature of these goods and their relatively small share in the U.S.’s total import turnover. In 2024, the U.S. was Vietnam’s largest export market for agricultural and seafood products, with a value of USD 4.16 billion, accounting for 3.5% of Vietnam’s total export turnover to the U.S.
If the U.S. imposes tariffs on Vietnam and other countries, it could present both opportunities and challenges for this sector. For example:
- Opportunities: Competitively priced products could gain market share if other countries face higher tariffs.
- Challenges: Increased costs and stricter import regulations could hinder exports.
Overall, due to the essential nature of these goods, demand is expected to remain relatively stable, even in the face of economic downturns or tariff increases.
Seafood Sector
Historically, the U.S. has not imposed uniform tariffs on imported seafood products from various countries. However, if such tariffs are introduced, the expected rates are likely to remain low due to the relatively small share of seafood in total U.S. imports. From 2021 to 2023, the U.S. imported seafood worth an average of USD 30.7 billion per year, representing only 1% of the country’s total import value, while U.S. seafood exports accounted for just 0.4% of its total export value.
Key Implications by Product Type
Pangasius (Cá tra):
- This sector is expected to benefit more than shrimp exports if tariffs are applied, as Vietnam’s pangasius would likely face lower tariff rates than competing Chinese products.
- In the U.S. market, Vietnamese pangasius directly competes with Chinese tilapia. If higher tariffs are imposed on Chinese imports, Vietnamese pangasius could gain a stronger competitive advantage.
Shrimp:
- Vietnam’s shrimp exports are projected to be less affected even if uniform tariffs are applied.
- Key competitors for shrimp exports to the U.S. include India, Ecuador, and Indonesia.
- Domestic shrimp production in the U.S. remains insufficient to meet domestic demand. According to the American Shrimp Processors Association (ASPA), in 2022, the U.S. produced only 134,000 pounds of warm-water frozen shrimp, fulfilling just 7.4% of domestic consumption.
- Therefore, the U.S. will continue to rely on imports, limiting the negative impact of tariffs on Vietnam’s shrimp industry.
Overall Outlook for the Seafood Sector
The Vietnamese seafood sector is expected to face minimal negative impact from potential U.S. tariffs. In fact, Vietnam could capitalize on opportunities if tariffs on Chinese seafood are higher, particularly for pangasius exports. The shrimp sector, while not directly benefiting, is unlikely to suffer significant losses due to the ongoing need for imported shrimp in the U.S. market.
Given the above opportunities and challenges, the research team forecasts that Vietnam’s seafood exports to the U.S. could exceed USD 2 billion in 2025, representing a 10-12% increase compared to the previous year. Under the base scenario, if Vietnamese seafood imports to the U.S. face a 10% tariff, the additional tax burden for Vietnam on this product could amount to USD 0.2 billion in 2025.
For agricultural products
In 2024, Vietnam’s agricultural exports to the U.S. showed positive growth, including:
- Cashew nuts: USD 1.15 billion (up 30% compared to the previous year)
- Pepper: USD 0.41 billion (up 85.3%)
- Fruits and vegetables: USD 0.36 billion (up 39.7%)
- Coffee: USD 0.32 billion (up 9.2%)
However, these products account for only a small proportion of the U.S.’s total import value (around 1.6% in 2024). Vietnam’s main competitors in the U.S. market include Mexico, Brazil, India, Indonesia, and Thailand. If the U.S. imposes import tariffs on agricultural goods, the expected tax rate for Vietnam is unlikely to be too high and could align with rates applied to other countries (lower than Mexico’s if their tariff rate reaches 25%).
According to the research team, Vietnam’s agricultural exports to the U.S. are projected to reach USD 2.7-2.8 billion in 2025, an increase of 15-20% compared to the previous year (under the base scenario). In this case, the additional tax burden for the sector could be around USD 0.28 billion in 2025.
(v) Steel and Aluminum Sector: Negative Impacts Expected
Steel Products:
- Countries like Canada, Mexico, Brazil, South Korea, and Germany have seen their U.S. steel import tariffs rise from 0% to 25%, while Chinese steel is already subject to a 25% tariff.
- This adjustment allows Vietnamese steel to compete more fairly with these countries (instead of previously facing higher tariffs).
- However, higher tariffs may encourage businesses from these countries to shift exports to other markets, increasing competition for Vietnamese steel exports both globally and domestically, especially from China.
- It remains uncertain whether Vietnam’s steel exports will benefit from this situation, as more data and time are needed for further assessment.
2024 Steel Export Figures:
- Vietnam exported USD 1.32 billion worth of steel to the U.S., accounting for approximately 4% of the sector’s total production value.
- Flat steel products are expected to be more negatively affected than long steel products due to a higher share of exports in total production (35.8% vs. 17.1% in 2024).
- Flat steel production currently involves importing hot-rolled coil (HRC) from China for processing and re-export. Companies heavily reliant on U.S. exports will face greater negative impacts.
Aluminum Products:
- According to Trademap data, the U.S. is Vietnam’s largest aluminum export market, accounting for around 25.4% of Vietnam’s total aluminum exports in 2023.
- In 2024, Vietnam exported approximately USD 479 million worth of aluminum and aluminum products to the U.S.
Major exports include:
- Aluminum structures such as lattice columns, frames, and doors
- Aluminum bars, rods, and profiles
Impact of New Tariffs:
- With the new tariff decision, Vietnamese aluminum exported to the U.S. will face an increased tax rate, rising from 10% to 25%.
- Although the absolute export value is not large, this increase will negatively affect Vietnam’s aluminum exports by reducing competitiveness in the U.S. market.
Some Recommendations
Based on the analysis, assessments, and forecasts outlined above, the research team offers several recommendations as follows:
For Government Authorities
Strengthen Cooperation with the U.S.:
Vietnam should place greater emphasis on promoting mutually beneficial cooperation with the U.S. across various sectors while enhancing diplomatic channels. At the same time, it is essential to consistently diversify markets, partners, and products while better leveraging the 17 FTAs (Free Trade Agreements) already signed.Balance Trade with the U.S.:
Vietnam should consider implementing measures to achieve a more balanced trade relationship with the U.S., including:- Open discussions with the U.S. on initiatives to help balance the trade deficit.
- Proactively reducing retaliatory tariffs as mentioned and increasing imports from the U.S., especially in areas where the U.S. has competitive advantages and Vietnam has demand (such as semiconductors, liquefied natural gas (LNG), aircraft, aviation equipment, medical devices, science and technology, education and training, and agricultural products).
- In the long term, Vietnam could consider negotiating and signing an FTA with the U.S.
Sector-Specific Strategies:
Relevant ministries and sectors should urgently develop targeted solutions for key export industries, particularly the five sectors mentioned earlier. These efforts should aim to minimize losses while strengthening domestic capabilities, resilience, and collaboration among businesses (both domestic and FDI) along the value chain to ensure adaptability, sustainable growth, and stability.Proactive Engagement:
Ministries, agencies, and industry associations should actively engage with U.S. partners and other relevant countries. They should provide information, offer guidance, collect feedback and concerns from businesses, and quickly discuss and implement appropriate, timely, and effective solutions to address emerging challenges.
For the Business Community
Proactive Monitoring:
Companies, especially exporters to the U.S., need to proactively cooperate with government authorities, Vietnam’s trade offices abroad, embassies, international organizations, and importers to stay informed about market trends and developments. This will enable businesses to respond promptly and appropriately.Seize Market Share Opportunities:
Vietnamese businesses should capitalize on the opportunity to increase market share (albeit modest) in industries where Vietnam has competitive strengths, such as electronics, textiles, footwear, seafood, and wood products, provided they meet the necessary requirements mentioned below.Transparent Sourcing:
Companies must carefully assess and ensure transparency in the use of semi-finished and finished products from China or other countries subject to U.S. trade defense measures to minimize risks of anti-dumping and trade defense investigations.
Additionally, businesses should improve the management and documentation of raw material and product origins, localization rates, and compliance with environmental and labor standards to overcome legal barriers and build trust with consumers and partners in export markets.Diversify Markets and Supply Chains:
Companies should diversify their markets, partners, and supply chains while taking full advantage of existing FTAs. This includes targeting large, high-potential markets such as the Halal market (with a population of 2.2 billion), as well as markets in Africa and South America.
Embracing information technology and circular business models can help reuse waste materials, reduce costs, and offset some of the increased tax burden in collaboration with partners.Enhance Risk Management:
Improve the ability to manage risks, including those related to interest rates, exchange rates, and trade defense investigations. Businesses should also increase their use of financial derivatives to better control these risks.Promote Dual Transformation (Digital and Green):
Companies should proactively embrace both digital and green transformation to align with global trends and meet rising partner and consumer demands. This will enhance competitiveness, brand value, and access to capital while ensuring sustainable development and deeper integration into global value chains.