On July 31, 2025, the Trump administration announced the results of the largest tariff adjustment since the beginning of the second term. In particular, Vietnam was imposed a 20% tax on most goods exported to the US—higher than the 19% rate of Southeast Asian countries such as Indonesia, Thailand, or the Philippines, and only lower than the 40% penalty rate for Laos and Myanmar. Although since April, Vietnam was one of the first countries to have access to the earliest tariff negotiations with the US government.
This decision quickly raised the question: why is Vietnam, which the United States has positioned as an increasingly important trading partner in Southeast Asia, falling into a tighter group compared to other ASEAN countries? The answer is not simple but can be seen in terms of a prominent factor: Vietnam’s large and sustainable trade surplus with the United States—an increasingly present “price” in the context of Washington prioritizing domestic industrial interests and resetting the global trade balance.
According to data from the Office of the United States Trade Representative (USTR), Vietnam currently has the fifth-highest bilateral trade surplus with the United States, behind only China, Mexico, Germany, and Japan. Data from US Customs shows that bilateral trade between the two countries reached $149.7 billion in 2024. Vietnam exported $136.6 billion worth of goods to the US and imported $13.1 billion. The trade gap amounted to more than $100 billion. This is an unprecedented record, even surpassing the surplus that China achieved with the United States in the early 2000s. In the eyes of the Trump administration, such a large surplus is not only a manifestation of imbalance but also proof that the United States is being “taken advantage of” by its partners in the international trading system—an argument that Trump used extensively during his first term.
Unlike other Southeast Asian countries, Vietnam has an export model that is highly focused on the US market, especially in labor-intensive industries such as textiles, wood products, consumer electronics, and components. These industries all use cheap labor and large-scale production, and most of the input materials are imported from China or the region. This not only makes the bilateral trade balance increasingly tilted towards Vietnam but also increases suspicions from the US about the possibility of Vietnam becoming a transshipment point for goods—that is, goods from China are brought to Vietnam, minimally assembled, and then re-exported to the US to avoid taxes. This is like the description of hermit crabs needing a host to survive. Although Vietnam has repeatedly announced periodically denying this suspicion, Hanoi is also urgently establishing mechanisms to control the origin of goods, especially in the fields of labels and genuine-counterfeit goods. But in the context of the rise of “America First,” fanned by Trump with his message of “bringing factories back to America,” technical arguments seem unable to appease the political determination of this 79-year-old business veteran.
Meanwhile, looking at the overall picture, the export model of Vietnam and countries like Indonesia or the Philippines is more diversified and less dependent on the US market. Export turnover from Indonesia to the US accounts for less than 10%, specifically 9.9% of total national exports, and the bilateral trade surplus is relatively small, only about 10-15 billion USD. This is the reason why these countries are subject to lower tariffs, despite being members of the supply chain of goods in Asia. In negotiations with the US, Indonesia also clearly demonstrated its goodwill to cooperate through investment programs in the US market and arms purchases, thereby maintaining its position as a “non-unbalanced partner.” “Deal” diplomacy is always favored by Trump; however, Vietnamese negotiators are also very good, but the country does not have enough resources to deliver on its promise to bring billions of dollars of investment to the US. That is the reason why Hanoi becomes less attractive in tax negotiations.
In addition to economic factors, the high tariffs imposed on Vietnam also reflect the geostrategic sensitivity of Trump 2.0’s trade policy. From Washington’s perspective, Hanoi is an attractive destination for US businesses fleeing China, but at the same time it is a gateway for Chinese corporations to “evade the ban” through the trick of roundabout investments or changing the origin of goods labels. The Trump administration has accused many large Chinese companies of “borrowing” Vietnam to transit electronic goods to the United States, causing Washington to issue high-level trade warnings. Although Vietnam has launched investigations and traced the origin of goods, the lack of uniformity in origin management remains a weakness in the eyes of US censors.
It should be noted that the imposition of a 20% tariff does not mean a “trade war” between the United States and Vietnam. On the contrary, the Trump administration has maintained the diplomatic legacy of the Trump 1.0 and Biden eras by considering Vietnam a strategic partner in Southeast Asia and a central position in the competition with China. But “partner” does not mean “privilege.” Vietnam’s rise in the global supply chain has forced the economy to shift from agriculture to industrial production to face greater constraints—including accepting stricter conditions to maintain its export advantage. On the one hand, it is a recognition of Vietnam’s role on the world economic map; on the other hand, it is also a reminder that large surpluses are no longer an absolute honor but a potential risk in the era of protectionism.
The question for Vietnam is how to maintain export growth without being caught up in the US criticism. The answer does not lie in mere political lobbying but requires a comprehensive strategy. Such a strategy requires looking beyond immediate benefits, inter-sectoral coordination, and clear responsibilities. It is also necessary to improve traceability, supply chain transparency, market diversification, and restructuring of key industries to reduce dependence on input materials from China. The Vietnamese government also needs to strengthen cooperation with international inspection agencies and promote bilateral and multilateral agreements with clear dispute resolution mechanisms to protect business interests.
In a world that is restructuring after the pandemic and geopolitical tensions, being hit with high tariffs is no longer a rare occurrence. But what matters is whether a country can turn pressure into motivation. For a strong export-oriented economy like Vietnam, the biggest lesson from the 20% tariff is that trade success must go hand in hand with a maturity in strategy to deal with global risks. Tariffs may be the price to pay for today’s surplus position—but they can also be a stepping stone to repositioning Vietnam in a new economic order if it knows how to turn challenges into opportunities.
