US President Donald Trump unveiled his global reciprocal tariff plan on April 2 and rattled Vietnam with a 46 per cent tariff rate on Vietnamese imports. This is the highest rate among major trading partners worldwide, though neighbouring nations were badly affected, with the rates for Laos and Cambodia sitting at 48 per cent and 49 per cent, respectively.

The move represents the most protectionist shift in US trade policy in recent memory, and Vietnam stands in the firing line. Vietnam is one of the US’ key trade partners, with exports to the market reaching around $120 billion last year.

The rates do not become effective until April 9, meaning Vietnam’s government – along with every other country and territory – have had little time to scramble a response.

Minister of Industry and Trade Nguyen Hong Dien sent an official letter requesting the US to postpone the tariff decision to allow time for discussions and to find reasonable solutions for both sides. Efforts are underway to arrange a phone call between the two sides and technical-level discussions with colleagues at the US Trade Representative as soon as possible, the ministry said.

Right after the announcement from the White House, Prime Minister Pham Minh Chinh also held a meeting with all leaders of ministries and government agencies to discuss a timely and suitable response.

The PM immediately established a rapid response team led by Deputy Prime Minister Bui Thanh Son, while DPM Ho Duc Phoc is directing ministries and government agencies to organise meetings and listen to the voices of businesses, including large exporters.

“We have some experience in surviving and overcoming dire challenges such as the coronavirus pandemic, global conflicts, and supply chain disruptions,” the PM said. “Trade competition is getting fiercer and more unpredictable. Vietnam hopes that the US will provide a policy consistent with the good relations between the two countries, the wishes of the people on both sides, and the efforts of Vietnam in recent times.”

Deputy Minister of Finance Nguyen Duc Chi told VIR, “We will persevere to discuss and negotiate with US trade partners, aiming for a trade balance so that consumers of both countries can benefit, following the efforts of Vietnam to balance the trade with the US in recent months. We hope that the US side will listen and take appropriate steps, and the tax rate will be considered.”

It was reported last week that DPM Phoc will visit the US on April 6-14 to try and renegotiate a deal. Executives from Vietnam Airlines and Vietjet will also reportedly visit New York to meet with Boeing about potential deals.

The Ministry of Finance (MoF) said that 46 per cent is much higher than the current tax rate on Vietnamese goods exported to the US.

“The new tariff from the US will negatively affect many Vietnamese manufacturing industries,” said Truong Ba Tuan, deputy director general of the MoF’s Department of Tax, Fees, and Charges Policies. “Particularly, five main industry groups accounting for 64.3 per cent of total export turnover to the US in 2024 will be most affected by this tax imposition.”

The main industry groups are electronics and various components, accounting for 28.6 per cent of total export turnover; textiles, garments, and footwear making up 21.9 per cent; wood and wooden products capturing 7.6 per cent; agriculture and seafood at 3.5 per cent; and steel/aluminium at 2.7 per cent.

Meanwhile, Chu Thanh Tuan from the RMIT University Vietnam’s Undergraduate Business Programme said, “With nearly 30 per cent of Vietnam’s total exports destined for American consumers, the introduction of such tariffs could erode price competitiveness, trigger order cancellations, and compel businesses to either absorb margin losses or shift production elsewhere.”

Tariffs imposed on Vietnamese exports to the US may trigger disruptions throughout supply chains, raise input costs, and reduce demand across a wide range of domestic sectors, Tuan said.

He added that the indirect impacts are just as concerning. They include supply chain disruptions as US buyers reduce orders or demand price renegotiations, and reduced foreign direct investment, particularly from manufacturers focused on export-driven growth.

Besides these, other domestic sectors such as logistics, finance, packaging, and compliance will also suffer ripple effects. This also may cause currency volatility, stemming from investor uncertainty and macroeconomic pressure.

“As these challenges unfold, Vietnam now faces a critical juncture which demands a strategic and coordinated response to safeguard its economy and maintain its position in global trade,” Tuan said. “It is crucial for Vietnam to emphasise its strategic economic role for US companies operating locally and to propose targeted mitigation measures by sector to prevent widespread fallout.”

Source: Vietnam Investment Review