The Impact of Tariffs on Vietnamese Exports: US-Vietnam Trade Relations Under Trump 2.0

Since returning to office on January 20, 2025, US President Donald Trump has launched a sweeping series of tariff measures, marking a return to the aggressive trade policies of his first term. Over the course of February, Trump announced a series of escalating tariffs aimed at key US trading partners, with Canada, Mexico, and China the first targets, as well as blanket tariffs on steel and aluminum imports and a worldwide reciprocal tariff plan. These measures reflect his administration’s broader effort to protect domestic industries and address what it views as unfair trade practices.

As a major supplier of goods to the US, Trump’s tariffs could significantly impact Vietnamese exporters. It is also possible that Vietnam will become the target of country-specific tariffs, as the country has a large trade surplus with the US and has previously been accused by the Trump administration of engaging in unfair trade practices.

However, Vietnam may be able to mitigate the impact by striking a deal with the US, especially if it agrees to increase imports of American goods or ease market access for US businesses.

Background: Trump’s tariffs

Trump imposes worldwide 25 percent steel and aluminum tariffs

On February 10, Trump signed proclamations reinstating the 25 percent tariff on all steel imports (the “steel proclamation”) and increasing the tariff on aluminum imports from 10 to 25 percent (the “aluminum proclamation”). These tariffs will apply to imports from all countries and regions “without exception” and will take effect on March 12, 2025.

FIND BUSINESS SUPPORT

Grow Your Presence in Asia with Complete Market Entry and Cross-Regional Support

Trump first imposed tariffs on steel and aluminum imports in 2018 following the Section 232 Investigation, which concluded that steel and aluminum products were entering the US “in such quantities and under such circumstances as to threaten to impair the national security” of the country.

According to the steel proclamation, the 25 percent tariff introduced in 2018 successfully reduced US dependence on imports and increased consumption of domestic steel. However, it argues that exemptions and alternative agreements negotiated under the Trump and Biden administrations have caused imported steel to account for a share of US consumption similar to pre-2018 levels.

The aluminum proclamation similarly claims that “efforts by foreign producers to circumvent the [aluminum] tariff have undermined [its] purpose.” It further states that, combined with country-specific exemptions, these efforts have driven domestic aluminum smelter capacity utilization rates below the target level intended by the tariff. The proclamation concludes that the 10 percent aluminum tariff is insufficient to address the “threatened impairment to our national security posed by aluminum imports.”

While several countries received exemptions from the 2018 steel and aluminum tariffs, Vietnam was never granted one. As a result, Vietnamese steel and aluminum exports were already subject to a 25 percent and 10 percent tariff, respectively. From March 12, the aluminum tariff will increase to 25 percent, while the steel tariff will remain unchanged.

Trump announces plan to impose reciprocal tariffs on all trade partners

On February 13, 2025, Trump signed a memorandum directing key ministers to implement a plan to impose reciprocal tariffs on all trade partners.

The “Fair and Reciprocal Plan” will examine non-reciprocal trade relationships with all trade partners, including tariffs on US products, unfair, discriminatory, or extraterritorial taxes on US businesses, workers, and consumers (including VAT), nontariff barriers or measures, including subsidies and regulatory requirements, and policies and practices that cause exchange rates to deviate from their market value.

Examples where the US’s trade partners do not provide reciprocal tariffs on American goods cited in a Fact Sheet include a 10 percent tariff imposed by the EU on American imported cars, while the US imposes a 2.5 percent tariff on European imported cars. Should the plan be implemented as intended, tariffs on car imports from the EU will rise to 10 percent.

The reciprocal tariffs will be applied in addition to existing duties, including the 25 percent steel and aluminum tariffs imposed earlier in February. As a result, products already subject to US tariffs will face a higher effective rate than their US export equivalents to a given country.

Background: US-Vietnam trade in 2024

In 2024, the US was Vietnam’s second-largest trading partner after China and the largest destination for Vietnamese exports. Meanwhile, Vietnam ranked eighth among the United States’ top trading partners. According to the US Commerce Department’s International Trade Administration (ITA), total bilateral trade between the two countries reached US$149.6 billion, marking a 20.4 percent increase from 2023.

Related Reading

Op-Ed: Trump 2.0 Will Benefit Vietnam – But Only if Trade Surpluses Avoid Populist Backlash

Vietnam also became the US’s sixth-largest source of imports last year, up from seventh place in 2023, with total imports reaching US$136.6 billion. Vietnam’s trade surplus with the US increased by US$18.9 billion from 2023, setting a new record of US$123.5 billion.

The US’s top imports from Vietnam were electric machinery, nuclear reactors, furniture and bedding, footwear, and apparel and accessories.

The US exported only US$13.1 billion worth of goods to Vietnam in 2024, though this was an increase of 33.1 percent from 2023.^[1] The US’s top exports to Vietnam were electric machinery, plastics, food industry residues, oils seeds, and nuclear reactors, boilers, and machinery.

Impact of steel and aluminum tariffs on Vietnam exports

Vietnam was the US’s fifth largest source of steel in 2024, rising from ninth place in 2023. In 2024, US imports of steel mill products for domestic consumption from Vietnam skyrocketed by 143.4 percent on the previous year to reach 1.2 million metric tons, valued at US$1.13 billion, per data from the ITA. Almost 75 percent was composed of flat carbon and alloy steel. Vietnam also exports a smaller amount of aluminum to the US. In 2024, Vietnam’s total exports of aluminum products for domestic consumption to the US dropped by 1.7 percent from 2023 to 35,593 metric tons, valued at US$142.9 million.

FIND BUSINESS SUPPORT

We help companies expertly navigate Asia’s corporate, indirect, individual, international tax, and transfer pricing domains.

It is important to note that Vietnam’s steel and aluminum exports to the US were already subject to tariffs of 25 percent and 10 percent, respectively. In 2018, during Trump’s first term, the US imposed Section 232 tariffs on steel and aluminum imports from all countries, citing national security concerns. While some countries later received exemptions, tariffs on many Vietnamese steel products have remained in place ever since.

As a result, the impact on Vietnam’s steel exports to the US is likely to be limited, especially given that exports have continued to grow rapidly despite the tariff. The tariff hike could even benefit Vietnamese exporters by leveling the playing field with other countries, which will now face the same 25 percent tariff. Notably, major US steel suppliers such as Canada and Mexico, which were previously granted exemptions, will now be subject to the tariff.

By contrast, Vietnamese aluminum exports to the US are more vulnerable. The tariff rate will increase by 15 percentage points, posing a greater challenge—especially since Vietnam exports smaller quantities of aluminum, and shipments had already declined in 2024 compared to the previous year, even before the tariff increase.

However, the global steel and aluminum markets are likely to experience significant shifts due to these tariffs. If the US achieves Trump’s stated goal of expanding its domestic steel and aluminum industries, major US suppliers will seek new markets for their products, intensifying competition for Vietnamese exports.

Impact of reciprocal tariffs on Vietnam exports

Trump’s reciprocal tariff plan will be “of comprehensive scope”, meaning that the impact on Vietnam’s exports could be extensive. However, it is important to note how strictly and broadly it will be implemented remains unclear.

Looking exclusively at existing tariffs, Vietnam is vulnerable to the plan. According to Reuters, Vietnam’s trade-weighted average most-favored nation tariff is 5.1 percent, compared to the US’s 2.2 percent. This means reciprocal tariffs could significantly increase the effective tariff rates on Vietnamese goods entering the US.

However, the non-tariff barriers mentioned in the reciprocal tariff plan may also implicate Vietnam. Firstly, the plan takes aim at “policies and practices that cause exchange rates to deviate from their market value, to the detriment of Americans”. In a report released on January 15, 2021, the result of an investigation launched under Trump, the US Trade Representative (USTR) concluded that Vietnam was undervaluing its currency to achieve an economic advantage and that these actions contributed to a trade imbalance with the US and other countries. As a result, the US listed Vietnam as a “currency manipulator”.

Related Reading

Vietnam-U.S. Trade and Investment Relations

In addition to the investigation into Vietnam’s purported currency manipulation, the USTR launched a Section 301 investigation related to Vietnam’s import and use of timber, claiming that Vietnam may be using illegally harvested or traded timber as inputs for its manufacturing of products that are exported to the US.

However, although the report found that Vietnam’s behavior was “actionable” under Section 301, the USTR also stated on January 19, 2021, Trump’s last day in office, that it would not take any actions in relation to the findings.

After taking office, the Biden administration swiftly reversed Trump’s approach to trade with Vietnam. The USTR resolved the disputes raised in the Section 301 investigations and in April 2021, it said there was “insufficient evidence” to classify Vietnam as a currency manipulator. In July 2021, it announced that no action would be taken against Vietnam, as a “satisfactory” agreement had been reached between the US Treasury Department and the State Bank of Vietnam.

With Trump back in office, and given the wording of the reciprocal tariff plan, there remains a distinct possibility that the US will relaunch investigations into Vietnam’s economic and trade practices and impose duties as it sees fit.

Vietnam also imposes VAT at a rate of 10 percent on goods and services, which the plan deems as an “unfair, discriminatory, or extraterritorial” tax on US businesses, and therefore subject to reciprocal tariffs.

Possible further import tariffs and trade deals

Given his focus on targeting economies with a trade surplus with the US, there remains the distinct possibility that Trump will impose tariffs directly targeting Vietnamese imports. As discussed, Vietnam’s trade surplus in 2024 hit a record high  It has also become one of the US’s top sources for imports, meaning it is unlikely to go under Trump’s radar.

Despite a review launched under the Biden administration, the US continues to label Vietnam as a non-market economy (NME). Under US law, NMEs are subject to certain antidumping and countervailing duties. This means the Trump administration could seek to impose tariffs on Vietnamese goods under this legal framework.

It is also possible that Vietnam’s exporters become caught in the crosshairs of mounting US-China trade tensions. It has been speculated that a sizeable portion of Vietnam’s exports to the US are actually re-exports from China – an estimated 16 percent in 2021 – as Chinese exporters seek to circumvent Section 301 tariffs by exporting goods to China via Vietnam. This is something that Trump has vowed to tackle. An executive order signed on his first day in office, titled the America First Trade Policy, explicitly calls for exploring the imposition of additional tariffs in relation to China, “particularly with respect to industrial supply chains and circumvention through third countries”.

FIND BUSINESS SUPPORT

Advance Your China + 1 Asia Manufacturing Strategy with Tailored Business Intelligence

It has also been argued that the steel and aluminum tariffs are ultimately targeted at China, with their broad scope a means to curbing Chinese reexports of steel and aluminum through third countries, including Vietnam.

Trump’s return to the White House also likely does away with any potential regional trade deals. While the US’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) was unlikely even under Biden due to bipartisan dislike of the treaty, the previous administration did pursue its own trade deal with Asia Pacific nations – the Indo-Pacific Economic Framework (IPEF). Launched in May 2022, the IPEF sought to develop trade between the fourteen member nations by facilitating the provision of trade licenses, reducing customs red tape, and improving regulatory transparency in the region, among other measures. In particular, the IPEF sought to expand trade in agricultural products, of which the US is a major exporter.

Although the IPEF did not propose to reduce or eliminate tariffs—unlike the CPTPP—Trump is likely to walk away from negotiations, given his penchant for undoing the previous administration’s actions.

Nonetheless, it is possible that Vietnam could strike a bilateral trade deal with the US. In a meeting between the US Ambassador to Vietnam Marc Knapper and Vietnam’s trade minister Nguyen Hong Dien on February 14, the ambassador reportedly stated that the US’s trade policy does not target Vietnam specifically.

Moreover, Nguyen suggested that Vietnam is willing to increase imports from the US, in particular of agricultural products. Knapper also encouraged Vietnam to “expedite legal frameworks to facilitate U.S. investment in new sectors including energy, semiconductor, AI, and aviation.”

Should Vietnam agree to make concessions such as buying more US goods and lowering barriers of entry to US businesses in Vietnam, it is possible the country can avoid the full brunt of Trump’s tariffs.

• Previous Article Vietnam’s Medical Devices Market Outlook: Projections and Insights
• Next Article