By The Straits Times | Created at 2025-04-03 03:17:38 | Updated at 2025-04-03 22:37:43
20 hours ago
HANOI - Vietnam, which deployed a Trump administration charm offensive by slashing levies on imports and vowing to buy more big-ticket US products to protect its trade-reliant economy, failed to avert one of the largest tariffs announced by the White House.
Vietnam is being hit with a 46 per cent tariff, one of the highest “reciprocal” rates aimed at what the Trump administration labels the worst offenders based on a government tally of the levies and non-tariff barriers imposed on US goods.
The new levies from the US, Vietnam’s largest export market, could significantly dent the nation’s ambitious goal of boosting growth to at least 8 per cent in 2025.
“If these tariffs remain in place, we could see GDP growth forecasts for Vietnam being downgraded,” said Mr Ruchir Desai, a fund manager at Asia Frontier Capital in Hong Kong. “Broad market sentiment will be negative given the importance of exports to the Vietnamese economy.”
Like governments around the region, Vietnam has sought to pull in capital from multinational companies as the country emerges as a viable alternative to China in the manufacturing of everything from gadgets to basic semiconductors.
Intel Corp. operates a chip assembly and test manufacturing facility in Ho Chi Minh City, and the country has also attracted the likes of Apple Inc. suppliers and Samsung Electronics Co.
Vietnam has taken increasing steps to convince the US it is serious about reducing its trade surplus, which reached US$123.5 billion (S$166 billion) in 2024, the third highest gap for the US, behind China and Mexico. Vietnam on March 31 slashed tariffs on a range of imports, from liquefied natural gas and automobiles to various agricultural products.
President Donald Trump said on April 2 he will issue a minimum 10 per cent import duty on all exporters to the US and slap additional duties on around 60 nations with the largest trade imbalances with the US.
The Trump administration set Vietnam’s country tariff at 90 per cent. A USTR report released on March 31 on foreign trade barriers listed import bans and restrictions, product registration requirements, and technical and sanitary barriers among the issues.
Mr Trump indicated he would consider lowering rates if other nations remove their trade barriers on US exports.
Vietnam planned to dispatch another delegation to the US this weekend led by Deputy Prime Minister Ho Duc Phoc and accompanied by executives from companies including Vietnam Airlines JSC, Vietjet Aviation JSC and VinaCapital Group Ltd. to New York ahead of Trump’s announcement.
Vietnam is among the world’s most trade-dependent nations, with exports equivalent to about 90% of gross domestic product last year. Suppliers for global brands have set up billion-dollar factories across Vietnam, making it an emerging manufacturing powerhouse, churning out everything from sneakers to smartphones.
The reciprocal tariff “could disrupt global trade, as supply chains and demand cannot adjust quickly in the short term,” Mr Pham Luu Hung, chief economist at SSI Securities Corp., wrote in a research note.
Vietnam’s negotiations with the US could temper the duties and lead to “positive developments,” Mr Hung added.
Communist Party chief To Lam in a March 31 meeting with US Ambassador to Vietnam Marc Knapper, reiterated the government’s push to increase purchases of US products, particularly agricultural goods, LNG and high-tech items. BLOOMBERG
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