On the first day of February 2025, immediately after taking office, US President Donald Trump signed an executive order imposing tariffs on all imports from the US’ three largest trading partners: China, Canada, and Mexico. The order, signed by Trump, imposed a 25% tariff on goods from Mexico and Canada and a 10% tariff on Chinese goods, effective February 4th.
The imposition of tariffs on these countries raised concerns about global tensions. Vietnam, which has a large trade deficit with the US, could also become a target.
At the regular Government meeting in January 2025, held this morning, Prime Minister Pham Minh Chinh requested that delegates closely forecast and analyze the situation for February and the coming months, especially new and emerging issues, such as the possibility of a global trade war, which could disrupt supply chains and shrink export markets. He urged them to propose solutions to ensure a quick and sensitive response, avoiding any surprises and seizing opportunities to maintain the current development momentum.
In an interview with VnEconomy, Pham Quang Vinh, former Deputy Minister of Foreign Affairs and former Vietnamese Ambassador to the US, emphasized that “Vietnam does not have any fundamental issues with the US, be it in economics, trade, or technology.”
According to Vinh, in the global trade and economic landscape, there is a mutual interdependence among countries. There are suppliers and providers, creating a comprehensive relationship in a context where the global economy is increasingly interconnected.
There are also large partners in the world, creating dominant economic flows globally. If we consider only GDP, the US and China alone account for more than 40% of the global total. Therefore, the trade activities of these two countries are of utmost importance. President Donald Trump, with his “America First” slogan, aims to restore America’s position and achieve what he considers “fair trade,” ensuring the country is no longer taken advantage of.
To achieve this goal, Trump will prioritize using tools like tariffs to pressure other countries and secure agreements favorable to the US. As such, Vietnam needs to consider two factors.
First, it is essential to assess whether there are any issues with the US and whether Vietnam is a primary target for them. Currently, based on Trump’s first term and the overall US policy, China remains the country’s most significant strategic competitor. Thus, Trump will employ unique approaches when dealing with China.
Secondly, President Trump will also pay attention to countries related to China or those with an imbalance in trade with the US, and trade deficits are one of the criteria he considers.
Regarding Vietnam, the current trade deficit with the US is part of a mutually complementary relationship. The rate of fraudulent product origin declarations in Vietnam is very low and only occurs in isolated cases involving a small number of businesses, not as a standard operating procedure for the economy. If we consider products with components originating from China, it’s not just Vietnam but products from all over the world that would fall into this category. Even the iPhone, an American product, has components from China. There is a clear distinction between transparent and fraudulent product origin declarations, and the rate of fraudulent declarations in Vietnam is minimal.
The trade deficit between Vietnam and the US is an objective, mutual issue in the economic relationship between the two countries. If the US restricts trade with China, it will naturally have to increase imports from other countries, and Vietnam has a competitive advantage in this regard.
Trump’s tariff strategy is designed not only to improve the trade deficit but also as a tool to resolve disputes and significant issues with other countries. However, as mentioned earlier, Vietnam does not have any fundamental problems with the US in terms of economics, trade, or technology.
Previously, currency manipulation gained attention, but the US has its own three criteria to determine whether a country is violating these rules. Vietnam’s policies are not intended to take advantage of the US in terms of macroeconomic management. Vietnam has also been proactive in addressing its partners’ concerns, and by the end of President Biden’s term, the State Bank of Vietnam continued to maintain close cooperation with the US Treasury on this matter.
Considering the above factors, we can conclude that while it is possible for Trump to impose tariffs on certain products like steel or zinc from Vietnam, the risk of tariffs being applied to the entire economy is relatively low. Even the Biden administration imposed tariffs on certain Vietnamese products.
To avoid the risk of tariffs on all exports to the US, Vietnam needs to implement several solutions. First, ensure fair trade practices, including transparent product origin declarations. Second, actively expand and facilitate the investment environment for foreign businesses, including American companies in Vietnam. Third, establish dialogue mechanisms to promptly address concerns and queries from both sides. Finally, continue to deepen and strengthen the comprehensive strategic partnership between the two countries.
“In conclusion, while there may be challenges and difficulties arising from the US’s changes, this is also an opportunity for Vietnam to seize external forces to create a new breakthrough. Therefore, Vietnam needs to proactively create a favorable environment in terms of policies, infrastructure, human resources, and even mindset to seize this opportunity,” emphasized former Ambassador Pham Quang Vinh.
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