Vietnam finds itself in a precarious position as the trade deficit with the United States continues to widen, surpassing $100 billion in the first 11 months of 2024. This marks an 18% increase from the same period in 2023. With Vietnam holding the fourth-highest commercial surplus with America, concerns are mounting over potential US tariffs. President Donald Trump, known for his aggressive trade policies, has previously referred to tariffs as "the most beautiful word in the dictionary." His administration's past actions, such as imposing tariffs on Chinese imports in 2018, have had ripple effects across global markets, benefiting Vietnam at the time.
Vietnam's economic landscape has been robust, with a growth rate of 7.09% last year, surpassing expectations set by the World Bank and the International Monetary Fund. Foreign direct investment reached a record $38 billion in 2019, reflecting a more than 7% increase from the previous year. However, companies such as Sao Mai Trading, which exports 60% of its products to the US, are now bracing for potential shifts in trade dynamics. The company's business boomed during the COVID-19 pandemic due to high demand from the US market.
"We experienced a boom in our business during the COVID-19 pandemic with demand for our products … skyrocketing in the US. We exported millions of products every month," stated Pham Thi Thanh Hang.
Despite these achievements, Vietnam is exploring other potential markets like Japan and Europe to diversify its export destinations and reduce reliance on the US market. The US president's focus on bilateral trade deficits and currency levels adds another layer of complexity to Vietnam's trade strategy.
“We are very worried at the moment. The US might impose tariffs on our products exported to the US to balance out the US's trade deficit with Vietnam,” expressed Pham Thi Thanh Hang.
Deborah Elms, an expert in trade and economic policy, highlights Vietnam's challenges with intellectual property rights and trade secrets. These issues could exacerbate tensions with the US.
“Unfortunately, Vietnam has problems on both of these (issues),” noted Deborah Elms.
In the backdrop of these developments, President Trump has not minced words regarding his stance on Vietnam.
“almost the single worst abuser of everybody,” he remarked, further stating that Vietnam “takes advantage of us worse than China.”
Such statements compound fears about impending tariffs that could disrupt Vietnam's thriving trade relationships with America. Nevertheless, Vietnam's leadership appears unfazed by potential tariff threats and uncertainties, maintaining an optimistic outlook with a growth target of 8 to 10% for this year. This ambition aligns with preparations for an important political meeting by the Communist Party of Vietnam in January 2026.
The implications of a second Trump presidency loom large over Vietnam's economic prospects. Deborah Elms speculates that Vietnam might face more significant challenges now compared to past years under Trump's administration.
“I think this is key – it is unlikely to do anywhere near as well in (Trump’s second presidency). And in fact, because it’s been such a success … it’s likely to do much worse than (in Trump’s first presidency),” she warned.
Leave a Reply