As a country where agriculture accounts for the largest proportion (73.3 per cent) of the economy, agricultural exports are one of Vietnam’s top development goals. The US, with an agricultural export market share of 21.7 per cent and Europe with 11.3 per cent in 2024, continue to be Vietnam’s largest and most important agro-export market.

Tariff barriers are often expressed in three main forms: high import taxes, tariff quotas, and preferential tariffs, and tax rate discrimination.

For Vietnamese agricultural products, the current US tariff schedule applies different tax rates for each type of agricultural product. Coffee is currently not subject to import tax because the US has to import raw coffee from many countries, cashew nuts enjoy a most-favoured-nation tax rate of zero, fresh fruits and vegetables such as mango, dragon fruit, and rambutan have tax rates from 5-15 per cent, while honey is subject to anti-dumping tax of 58-61 per cent.

However, Vietnam does not have any agro-products subject to self-defence tax by the US government.

The EU tariff system for agricultural products imported from Vietnam has undergone important changes since the EU-Vietnam Free Trade Agreement (EVFTA) took effect in 2020. However, to enjoy tariff incentives, Vietnamese agricultural products exported must meet the rules of origin as prescribed by the EVFTA, strict food safety and quarantine standards set by the EU, and a number of other regulations.

As an industry with lower profit margins than some other industries and efficiency based largely on output, trade policy affects the long-term and sustainable development of Vietnamese agricultural exporters. Low export value leads to a corresponding decrease in input material purchase prices, directly affecting farmers, producers, and the domestic agricultural sector.

However, US tariff barriers also have many positive effects on Vietnam’s exports. With many strict import standards with regulations on plant quarantine, food safety and traceability, Vietnamese enterprises have to improve product quality through improving production, while applying modern technology and international standards. When the quality meets such standards, agricultural products can also penetrate markets such as the EU, Japan, and Canada.

Tariffs will create incentives for investment in the agricultural sector. Enterprises and farmers are encouraged to invest in processing technology, post-harvest preservation, and sustainable farming to meet export standards. International investors are also more interested in Vietnam’s agriculture, and international investment contributes greatly to the modernisation of the industry and the improvement of competitiveness.

The US requirements for Vietnamese agricultural products force enterprises to build transparent supply chains, and thereby move towards forming sustainable supply chains.

Finally, tariff barriers will create incentives for trade preferential negotiations. Although there is no FTA with the US, meeting high standards can create a premise for future tariff reduction negotiations.

The positive impacts of the EU tariff system on Vietnam’s agricultural exports are most clearly demonstrated by the benefits that the EVFTA brings. Firstly, it significantly reduces import tariffs on Vietnamese agricultural products, helping enterprises reduce export costs, increase competitiveness, and create a great advantage compared to competitors that do not have an FTA with the EU. In the context of the EU’s high demand for clean food, Vietnamese enterprises will have many opportunities to expand their export markets to the EU.

The deal also encourages investment in the agricultural sector because when tariffs are reduced, enterprises have the opportunity to increase profits and add capital to invest in technological innovation and improve product quality. In addition, many EU enterprises are also interested in and investing in Vietnam’s agricultural sector to take advantage of EVFTA incentives.

The EU tariff system also brings many challenges. Competition between countries that benefit from low tax policies when exporting agricultural products to the EU will still exist. Strict and stringent requirements on rules of origin, technical barriers and quality standards increase production costs and export times.

Vietnamese businesses may also be affected when the EU applies trade defence measures, such as anti-dumping or anti-subsidy duties on Vietnamese products, or the EU may apply tariff quotas if there is a sudden increase in import volume.

To achieve its set goals, Vietnam needs to have solutions to encourage export efficiency. The government needs to boost trade negotiations to reduce import taxes, as well as sign bilateral trade agreements that are beneficial to export goals.

In addition, the government must move to harmonise the trade balance between Vietnam and the US as well as the EU to reduce the risks of tariffs occurring when the trade balance is too unequal. For businesses, diversifying export markets by expanding old markets as well as finding new markets are significant goals. Businesses must also focus on developing added value for Vietnamese agricultural products, especially shifting from raw exports to deep processing, to increase product value and reduce the impact of tariffs.

Source: Vietnam Investment Review