Vietnam’s Manufacturing Sector Faces Uncertainty Amid US Tariff Concerns

In a recent survey, 41% of businesses with manufacturing ties to Vietnam are considering diversifying away from the US market. The survey, conducted by AmCham Vietnam, highlights the growing concern over potential US tariffs. With the US being Vietnam's most significant market, these developments could impact economic relations between the two nations.

Companies operating in Vietnam remain apprehensive about the effects of US tariffs. These concerns arise despite initial optimism following former President Donald Trump's announcement of tariffs on China, Mexico, and Canada. The survey revealed that nearly two-thirds of manufacturers foresee potential layoffs due to the tariffs. This outlook reflects the worries shared by businesses globally about the ripple effects of US trade policies.

The survey, which gathered input from over 100 members of AmCham Vietnam, including multinational giants like Intel and Nike, underscores the widespread anxiety within the manufacturing sector. Vietnam's substantial $50 billion trade surplus with the US places it as the fourth-largest trade surplus partner, making it a potential target for new duties. Consequently, 81% of respondents and a staggering 92% of manufacturers expressed their concern about potential tariffs, with 94% anticipating negative impacts.

"This shift could see companies redirecting exports to other markets or adjusting supply chains to reduce their reliance on the US," – AmCham

The investment climate in Vietnam remains robust, with more than 60% of foreign investment channeled into manufacturing. The total foreign investment stock stands at $500 billion. However, the looming threat of tariffs has sparked a reevaluation among investors and companies alike. An unnamed investment adviser noted:

"Everybody was expecting problems but frankly we've been surprised by the so-called reciprocal tariffs as it is a very odd measure," – An investment adviser with a long experience in Vietnam

Foreign investors with manufacturing operations in Vietnam had largely maintained a positive outlook despite trade tensions. Yet, the survey results suggest that this optimism is now tempered by caution. Companies may need to explore alternative markets or adjust supply chains to mitigate risks associated with US tariffs.