Introduction: Trade Wars in a Fragmented World
In today’s fragmented global landscape, trade has become a strategic battlefield. From tariffs and sanctions to supply chain disruptions, economic tools are increasingly used to reshape geopolitical dynamics. The rise of trade wars—particularly between the U.S. and China—has reshaped global commerce, drawing in nations across the Global South, including Vietnam.
While Vietnam has historically benefited from shifting global production patterns, it now faces a formidable challenge: the imposition of a 46% U.S. tariff on a wide range of Vietnamese exports announced in April 2025. This move—motivated by trade imbalance concerns—carries the potential to undermine years of export-driven growth and hard-earned supply chain integration.
However, this tariff shock is not merely a crisis. It is a turning point—an inflection moment that will test the resilience of Vietnam’s policy, economy, and vision. This article explores the impact of the U.S. tariff on Vietnam’s key sectors, analyzes national responses through both legal and strategic lenses, and offers forward-looking recommendations grounded in Vietnam’s development goals and sovereignty.
The 2025 Tariff Shock: Sector-by-Sector Impact on Vietnam
In April 2025, the United States announced a 46% countervailing tariff on Vietnamese exports—part of a broader economic campaign targeting more than 60 countries. Unlike previous measures focused solely on China, this new wave directly affected Vietnam’s key industries, exposing structural vulnerabilities in its export-dependent economy.
According to Vietnam’s Ministry of Finance, the U.S. tariff is five times higher than Vietnam’s average import tax on U.S. goods (9.4%). Key sectors such as electronics, textiles and footwear, furniture, and agriculture—which together account for over 80% of Vietnamese exports to the U.S.—are particularly vulnerable.
Electronics: The Crown Jewel Under Pressure
Vietnam exported over $70.5 billion worth of electronics and machinery to the U.S. in 2024. Major players such as Samsung, Intel, Foxconn, and Luxshare operate advanced manufacturing hubs across the country. The 46% tariff threatens profit margins, investment flows, and employment for hundreds of thousands of skilled workers.
Textiles and Footwear: The Labor-Intensive Backbone
With exports exceeding $46.2 billion in 2024, Vietnam is the second-largest apparel exporter to the U.S. after China. The new tariff could lead to factory closures in provinces like Long An, Đồng Nai, and Bắc Ninh, disproportionately affecting low-income workers and female laborers.
Furniture and Wood Products: High-Value Goods at Risk
Vietnam’s wood and furniture exports to the U.S. reached $28.3 billion in 2024. As the largest Asian exporter of wood furniture to the U.S., Vietnam has built a reputation for quality and sustainable sourcing. The tariff may cause order cancellations and long-term supply chain disruptions.
Agriculture: The Underrated Casualty
Vietnamese agricultural exports—ranging from coffee and cashew nuts to tropical fruits—surpassed $8.5 billion to the U.S. in 2024. These products often rely on price competitiveness. Even a modest tariff increase can render them unviable for American importers, hitting smallholder farmers the hardest.
Vietnam’s Legal and Policy Response: Lawful, Measured, and Strategic
Faced with the steepest tariff shock in years, Vietnam has responded not with retaliation but with a calculated, lawful strategy—guided by its principles of peaceful cooperation, economic integration, and sovereign autonomy.
Decree 73/2025/NĐ-CP: A Legal Instrument for Dialogue
In Q1/2025, before the U.S. announced its tariff hike, Vietnam’s Ministry of Finance issued Decree 73/2025/NĐ-CP, amending previous tariff schedules (notably Decree 26/2023/NĐ-CP). The decree lowered import duties on 16 categories of goods—many of which are exported from the U.S.—to improve bilateral trade balance and affirm Vietnam’s transparent and cooperative trade policy.
According to expert, this move is “an effort to ensure macroeconomic stability and lawful compliance, while seeking to maintain a balanced and fair trade environment with strategic partners like the United States.”
Proactive Tax Review and Transparency
Before issuing the decree, Vietnam conducted a comprehensive review of all major tax categories—import tax, VAT, special consumption tax, and environmental tax—to clarify the actual tariff levels applied to U.S. goods. The analysis, shared with the U.S. Trade Representative, showed that most American exports to Vietnam face import duties of 0–15%, far below the newly imposed 46%.
Flexible Diplomacy and Multilateralism
Instead of responding with counter-tariffs, Vietnam has opted to leverage its multilateral trade partnerships. With active FTAs like CPTPP, EVFTA, and RCEP, Vietnam signals to the world that it is a responsible, rule-based actor seeking long-term trade harmony—not confrontation.
This legal and policy stance reinforces Vietnam’s broader economic diplomacy strategy: independent, self-reliant, diversified, and proactive.
Strategic Framework: Red Ocean vs. Blue Ocean in Vietnam’s Response
To understand Vietnam’s strategic response to the 46% U.S. tariff, it is helpful to apply the Red Ocean vs. Blue Ocean Strategy framework—developed by Kim & Mauborgne—which helps nations and companies differentiate between defending in saturated markets and innovating in new spaces.
Red Ocean: Defending in Hostile Markets
The U.S. market is a classic Red Ocean—highly competitive, politically sensitive, and full of rival low-cost producers. Vietnam’s key exports (electronics, apparel, footwear, furniture) directly compete with those from China, Mexico, Bangladesh, and India.
Vietnam’s Red Ocean responses include:
- Negotiating for tariff relief, not retaliation.
- Issuing Decree 73/2025/NĐ-CP before the U.S. tariff announcement as a proactive measure to demonstrate goodwill and trade transparency.
- Supporting export enterprises with short-term tax relief and trade credit.
These are defensive moves designed to retain market share in a hostile trade environment.
Blue Ocean: Creating Space Beyond Competition
Vietnam’s medium- and long-term response should draw from Blue Ocean thinking: rather than compete on cost in saturated markets, create differentiated, high-value, innovation-led sectors.
Vietnam’s Blue Ocean strategy includes:
- Shifting from OEM to ODM/OBM in electronics and textiles.
- Developing national brands in processed food, high-end fashion, and green products.
- Investing in semiconductors, automation, and renewable energy.
- Strengthening the domestic consumer market (100 million people).
- Positioning Vietnam as a regional digital manufacturing hub.
Dual Strategy: Resilience Through Balance
Vietnam doesn’t have to choose between Red and Blue. In fact, the most effective path is a hybrid strategy: protect current markets while transforming future capabilities. As seen during the COVID-19 recovery and the U.S.–China trade war, Vietnam has proven itself capable of adaptation.
In this dual model, Vietnam leverages its existing export strength while investing in structural reforms, technology upgrading, and institutional innovation.
Comparative Perspectives: Vietnam, ASEAN, and the Global South in the New Trade Order
Vietnam is not alone in facing economic pressure from major powers. Across ASEAN and the broader Global South, countries are increasingly entangled in the geopolitical rivalry between the United States and China. The imposition of tariffs, sanctions, and export controls has become a common tool of statecraft, forcing smaller nations to rethink their economic strategies.
Malaysia, Thailand, and Indonesia: Export Vulnerabilities Shared
Much like Vietnam, Malaysia and Thailand have strong exposure to electronics and automotive exports. Indonesia, meanwhile, relies heavily on commodities like palm oil, coal, and nickel. These countries have also experienced disruptions from U.S. and EU protectionist policies, although not as severe as Vietnam’s current tariff shock.
ASEAN as a bloc has responded by deepening regional trade integration—notably through RCEP, which brings together China, Japan, South Korea, Australia, and New Zealand with ASEAN.
India, Brazil, and South Africa: Strategic Hedging and Domestic Industry Support
Elsewhere in the Global South, countries like India, Brazil, and South Africa have taken a more protectionist stance—supporting domestic industries while selectively engaging in global supply chains.
For example:
- India increased its focus on “Make in India” to reduce reliance on Chinese electronics.
- Brazil reinforced agri-food self-sufficiency after supply disruptions in 2022–2023.
- South Africa is promoting local manufacturing while seeking new trade routes with Asia.
Vietnam’s Unique Path: Agile but Vulnerable
Unlike some of its neighbors, Vietnam has pursued deep global integration. It has signed over 15 FTAs, and is one of few countries with agreements covering both the U.S. and China, the EU, and key Indo-Pacific partners.
However, this openness also increases exposure. Vietnam’s export concentration to the U.S. leaves it vulnerable to abrupt policy shifts. Therefore, while Vietnam’s trade network is a strength, it also requires resilience mechanisms, including stronger domestic demand, deeper ASEAN coordination, and proactive industrial policies.
Recommendations: Strengthening Vietnam’s Economic Sovereignty and Adaptive Capacity
To respond effectively to the 2025 U.S. tariff and future trade disruptions, Vietnam must align short-term mitigation with long-term transformation. Below are six interlinked recommendations, grounded in Vietnamese law, global best practices, and Vietnam’s national development strategy to 2045.
Continue Lawful Engagement through Transparent Trade Policy
Vietnam should continue to use legal frameworks such as Decree 73/2025/NĐ-CP to showcase its good faith and openness, while maintaining reciprocity in negotiations. The government should also publish regular white papers on tariffs and trade practices to preempt misinterpretation from foreign partners.
Expand Target Markets beyond the U.S.
Vietnam should accelerate trade expansion into non-traditional markets such as the Middle East, Africa, and Latin America—regions with rising demand and fewer geopolitical constraints. Strategic FTAs and trade missions to these regions can reduce overreliance on any one economy.
Upgrade Domestic Manufacturing Value Chain
Instead of competing purely on cost, Vietnam must move up the value chain by adopting Industry 4.0 technologies, investing in semiconductors, AI, and green manufacturing, and supporting local firms to become original design manufacturers (ODMs) and brand holders (OBMs).
Develop a National Strategic Reserve for Trade Disruption
Just as Vietnam has national reserves for food and fuel, it should develop a strategic trade resilience fund to support affected sectors during tariff or sanction shocks. This could include subsidies, retraining, or temporary tax relief packages for exporters.
Invest in National Branding and Digital Trade Infrastructure
Vietnam’s global image as a reliable, high-quality manufacturer should be institutionalized through “Made in Vietnam” branding programs, national product certification, and digital platforms for borderless e-commerce.
Embed Trade Resilience in Education and Vocational Training
Universities and vocational schools should integrate trade policy, sustainability, and digital supply chain management into curricula to train a workforce ready for future disruptions. This helps embed trade resilience at the societal level.
Conclusion: A Moment of Reckoning and Renewal
The U.S. tariff shock of April 2025 is more than a commercial dispute—it is a strategic stress test for Vietnam’s economic model, trade dependencies, and institutional resilience. It challenges the country to confront both its strengths and its vulnerabilities in the global system.
Over the past decade, Vietnam has become a success story of export-led development and FDI attraction. Yet this success has come with trade concentration risks. The tariff serves as a wake-up call to shift from quantity to quality, from cost to capability, and from dependency to strategic autonomy.
Vietnam’s response—lawful, measured, and reform-driven—stands in contrast to the retaliatory impulses seen elsewhere. By maintaining calm diplomacy, deploying legal instruments, and outlining a national transformation strategy, Vietnam offers a model for middle-income countries navigating turbulent times.
The challenge is real—but so is the opportunity. If Vietnam can convert this moment of pressure into a catalyst for diversification, digitalization, and domestic innovation, it may not only survive the storm—but lead a new generation of Global South economies toward sovereignty and sustainability.
