BY UNA GALANI
HONG KONG- Within days of launching a global trade war, Donald Trump boasted his counterpart in Vietnam was ready to reduce tariffs to zero. But if officials from Hanoi visiting the United States this week are unable to secure a delay or substantial reduction to the US president’s announced 46 percent levy on the Southeast Asian economy’s exports, the country home to 101 million people will endure epic disruption, perhaps more so than anywhere else in the world.
That’s because Vietnam sends 29 percent of its exports, including electronics, textiles and shoes made for iPhone-maker Apple Nike and Adidas to the US Nearly 9 percent of its GDP is exposed to the world’s largest economy, more than three times the level for China, Nomura estimates. While Trump’s administration is sending mixed signals on the scope for countries to negotiate, Hanoi will struggle to meaningfully reduce its $123 billion trade surplus with the US even if state firms promise to purchase liquefied natural gas or Boeing airplanes.
There may be other ways to please the real estate magnate, of course. The government could speed clearances for the Trump Organization which is eyeing multibillion dollar projects including hotels in Vietnam, for example. Earlier this month, Hanoi granted permission for Trump advisor Elon Musk’s SpaceX to launch its satellite Starlink services in the country on a trial basis.
Ultimately, a meaningful trade reprieve for Vietnam would require a massive rowback from Trump for not very much in return. Even if the US were to halve the tariff due to go into effect on April 9, manufacturing in Vietnam would be largely unfeasible unless it significantly weakens its currency.
Negative perceptions will stick too. The eye-watering tariff on the country, though numerically calculated, reinforces fears that Trump is targeting Vietnam to contain China. Goods from the People’s Republic, now facing US levies of at least 54 percent are stopping in Southeast Asia with limited value-added before heading to American consumers. That will keep Vietnam in Trump’s firing line: the president’s America First Trade Policy, published on his first day in office, also called out such trade circumvention.
Trump and his predecessor wanted an alternative to China’s manufacturing powerhouse and Vietnam emerged as one. Exports and foreign direct investment fueled its economic boom but analysts at Goldman Sachs have now slashed the country’s GDP growth forecast for 2025 to 5.6 percent, from 6.8 percent, and warn of a larger negative impact if the tariffs are permanent. Whatever happens next Vietnam’s fortunes are set to alter for the worse.
