[Member News] Vietnam has a strong foundation for navigating trade challenges (By Avison Young)

In early April, U.S. President Donald Trump announced that a reciprocal tariff of 46% would be imposed on Vietnamese exports. Once implemented, higher trade barriers and the ongoing risk of an escalated U.S.–China trade conflict are likely to weigh on Vietnam’s short-term export performance to the U.S.

David Jackson – Principal and CEO, Avison Young Vietnam

Still, Vietnam continues to be viewed as one of the key manufacturing hubs in Asia, with strong global export linkages. Commenting on U.S. tariffs and its potential impacts, David Jackson – Principal and CEO, Avison Young Vietnam said:

“The 46 per cent reciprocal tax policy, set to take effect on April 9, is already taking a hit on investor confidence. Global markets have reacted due to President Donald Trump’s unpredictable policies and ongoing technological changes, creating immediate uncertainty.

Vietnam will surely feel the impact of the new tariff, as US consumer behaviour remains unpredictable, influenced by political and economic reactions. This adds another layer of uncertainty for exporters. The extent of the impact will vary by industry. Sectors like motor vehicle manufacturing, wood processing, textiles and garments will possibly be hit hardest.

There are hopes that negotiations between the two countries will help alleviate the short-term pain, while the long-term impact is expected to be limited. Smart manufacturers have been adapting their contingency plans amid the increasingly uncertain global supply chain. Businesses have been carefully managed stock levels and controlled product output to avoid disruptions, much like those seen during COVID-19 when shipping costs soared.

In the long run, businesses will continue to consider Vietnam as a destination for relocation thanks to the key advantages the country has to offer, such as affordable labour costs, a strategic location (shared border with China and access to the ASEAN market), favourable incentives, and more. Therefore, despite initial instability, Vietnam’s strategic advantages will ensure its continued strength in global trade.

Vietnam has a strong foundation for navigating trade challenges, thanks to its government’s ingenuity and strategic negotiating skills.

The country has consistently balanced relationships between Western and Eastern trade partners, ensuring it maximises the benefits of global trade agreements. A key strength lies in Vietnam’s smart diplomatic strategies. Hence, to counter obstacles like the US reciprocal tax, I believe Vietnam will continue leveraging its well-established diplomatic networks to negotiate favourable terms and exemptions where possible.

Diversifying trade partnerships has been another all-out effort by the Vietnamese government. With 12 comprehensive strategic partnerships and 17 free trade agreements in effect, Vietnam has already built a strong global trade network. To mitigate risks from over-reliance on major economies like the US and China, policymakers have further strengthened relationships with emerging markets and expanded participation in regional trade blocs. Vietnam’s success in renegotiating the Trans-Pacific Partnership after the US withdrawal demonstrates its ability to adapt and protect its trade interests.

Beyond trade agreements, Vietnam’s demographic advantage plays a significant role, with an attractive consumer market, drawing major investments from multinational manufacturers such as IKEA, Samsung, LEGO, and more. Policies that enhance workforce skills and infrastructure will further solidify Vietnam’s position as a key player in global supply chains.

While the US tariff policy introduces short-term disruptions, Vietnam’s resilient trade strategy, diplomatic expertise, and strong demographics will ensure its long-term competitiveness in the global market.”

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EMBEDDED LINK: https://vir.com.vn/ceo-opinions-on-unexpected-reciprocal-us-tariffs-125821.html