Sharing his insights recently, Dinh Quang Hinh, head of Macro and Market Strategy at VNDIRECT Securities Company, said the newly announced 46% tariff will pose significant challenges for Vietnam’s trade balance.

He pointed to the fact that Vietnam recorded a large trade surplus with the US, reaching US$104.6 billion in 2024, a 5% increase compared to the 2023 figure, along with strong export growth to the US, which rose by 23.2% in 2024 compared to 18.8% in 2023.

The US market accounts for about 30% of Vietnam’s total export turnover, so any significant changes in US tariffs will have a considerable impact on the country’s export outlook, emphasised Hinh.

According to the economic expert, the wood processing, textiles, machinery and equipment, footwear, and electronics industries would be heavily impacted by the new tariff rate as they rely more than 30% on the US market.

In contrast, industries like steel, cameras, video cameras and components, mobile phones, and seafood rely less than 20% on the US market, meaning the potential impact on these industries may be more limited.

The VNDIRECT expert said he believes that the 46% tariff is the ‘worst-case scenario’, and the official tariff rate may be adjusted depending on the outcome of trade negotiations between Vietnam and the US.

VNDIRECT has outlined two scenarios for Vietnam - the 46% tariff in the worst-case scenario, and a lower tariff rate of 20-25% in the more positive scenario.

In the worst-case scenario, Vietnam would be placed among the countries facing the highest tariffs, alongside China and the EU, that are significantly higher than some direct competitors in the region such as India, Bangladesh, Indonesia, and the Philippines.

This would certainly reduce the competitiveness of Vietnam’s exports in the US market. In addition, the sharp increase in costs passed on to US consumers would negatively affect demand for imported goods, particularly for items that are easily substitutable or highly price-sensitive, such as furniture, textiles, footwear, and agricultural products.

Moreover, the competitive pressure in other important export markets like China and the EU would increase, as demand decreases due to a bleak economic outlook driven by the trade war and governments pushing consumers to prioritize domestic products.

In this scenario, Vietnam’s exports to the US could drop by about 20-25% in 2025 compared to a scenario without tariffs, and the country’s total export turnover could decline by around 9-11% compared to a scenario without tariffs. Previously, Vietnam’s exports were projected to grow by around 10.4-12.2% in 2025.

In the negative scenario, Vietnam’s export turnover could either remain flat or see only slight growth in 2025 that could lead to a 2-3 percentage point lower GDP growth in 2025 compared to the scenario without tariffs, predicted the VNDIRECT expert.

In the more positive scenario, if the reciprocal tariff is adjusted to 20-25%, Vietnam’s exports to the US would generally be less affected due to the lower tariff rate compared to China, and would not face any disadvantage compared to the 25% tariff the US plans to impose on Mexico and Canada.

Furthermore, there would be no significant difference in the tariff rate between Vietnam and some direct competitors in the region such as India, Bangladesh, Indonesia, and the Philippines, helping to maintain the competitiveness of its exports.

In this scenario, Vietnam’s exports to the US could only decline slightly by about 5-10% compared to a scenario without tariffs, and the country’s total export turnover in 2025 would only decrease slightly by about 3-5% compared to the scenario without tariffs.

In this scenario, Vietnam’s export growth could still reach a decent level of around 6-7% in 2025, said the VNDIRECT expert.

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