U.S. Government Shutdown: Potential Impact on Vietnamese Businesses?

The U.S. government officially shut down at midnight on October 1st (local time, 11 AM Vietnam time), following Congress’s failure to resolve budget allocation issues.

This has sparked concerns among some Vietnamese individuals regarding potential impacts on business, investment, tourism, and education. However, according to Mr. Đặng Minh Lành, Director of New GBI Furniture Co., Ltd., the shutdown is primarily political, stemming from disagreements between the Republican and Democratic parties on policy matters.

“State and federal operations in the U.S. remain unaffected, ensuring no disruption to Vietnam’s timber exports. Trade activities continue as usual, with no tangible impacts observed,” Mr. Lành assured.

Similarly, President Biden’s proposal to impose 30-50% tariffs on certain wood products remains at the informational stage and has not yet taken effect. Mr. Lành believes these tariffs are unlikely to pass, as woodworking is a labor-intensive industry where U.S. companies lack a production advantage. “Even several U.S. states have voiced strong opposition, as higher tariffs would drive prices up, negatively affecting consumer purchasing power,” he added.

Mr. Trần Quốc Mạnh, Vice Chairman of the Vietnam Handicraft Exporters Association, echoed this sentiment. He noted that government shutdowns are not unprecedented in U.S. history, having occurred multiple times before.

“While this shutdown is prolonged, causing some federal employees to take leave and impacting society to an extent, its effects are not far-reaching. For timber exports, no direct correlation has been observed, with tax policies remaining the primary concern,” Mr. Mạnh stated.

However, Mr. Mạnh highlighted that the wood industry’s greatest concern for the remainder of the year is the potential implementation of the President’s proposed tariff increases, which could significantly hinder timber exports to the U.S.

Mr. Đặng Phúc Nguyên, Secretary-General of the Vietnam Fruit and Vegetable Association, confirmed that fruit and vegetable exports to the U.S. are proceeding normally, with no businesses reporting difficulties due to the shutdown. “Annual fruit and vegetable exports to the U.S. total approximately $300 million, with this year’s projections reaching $400 million. Key exports include fresh coconuts, mangoes, and dragon fruit,” Mr. Nguyên reported.