Issue 25: Vietnam's Options

17 April 2025

Vietnam potentially  faces the second highest tariff rates after China. The country’s trade deficit with the US is the fourth largest and rising. A third of Vietnam’s exports go to the US and gross exports account for 88% of GDP. The US has all the leverage and Vietnam has no choice to but to negotiate. However what each country can gain from each other is limited. Trump will force Vietnam to lower tariff rates, tighten rules of origin and perhaps import a bit more from the US. But Vietnamese companies aren’t re-locating to the US, there are no critical industries for Trump to target and the US cannot wean itself of Vietnam’s cheap low value-added consumer goods.