Impact of US trade policy on Vietnam not significant: Gov't

The Hanoi Times — Vietnam is not immune to the effects of recent US trade policies, but has not been significantly affected, Deputy Minister of Industry and Trade Nguyen Sinh Nhat Tan said at a regular government press conference on March 5.

Tan explained that US President Donald Trump has introduced several policies, especially regarding tariffs. All goods exported to the US are subject to tariffs, but the rates vary by product and country.

US trade policies have had implications for global trade flows, causing shifts in supply chains, and "Vietnam is not exempt from these effects, but it is not one of the most affected countries," he said.

To address these challenges, the Ministry of Industry and Trade (MoIT) has been working with other government agencies to report developments to the government. A meeting is scheduled for March to discuss responses. The ministry has also instructed trade offices around the world, not just in the US, to conduct research and provide timely updates, he said.

As strategic competition among countries intensifies, several nations have adjusted their trade policies, especially tariffs, affecting global trade and supply-demand dynamics. Being a developing country with a relatively small economy and high trade openness, Vietnam has limited resilience to external shocks. Therefore, Prime Minister Pham Minh Chinh has asked ministries and local authorities to prepare response strategies.

Vietnam and the US established diplomatic relations in 1995 and upgraded their ties to a Comprehensive Strategic Partnership in September 2023. Over the past two decades, the US has been Vietnam’s largest export market, while Vietnam has become the US’s seventh-largest trading partner. Last year, bilateral trade reached nearly US$150 billion, with Vietnam exporting $137 billion to the US, a 19% increase from 2023.

Through the US Embassy in Vietnam and the Vietnamese Embassy in the US, Tan said, MoIT has conveyed Vietnam's desire to strengthen a balanced and sustainable economic and trade relationship that benefits both countries. The government has also reiterated that Vietnam has no policies that could harm American workers or national security.

On March 13, Minister of Industry and Trade Nguyen Hong Dien is scheduled to meet with the US Trade Representative to discuss the "very positive" relationship between the two nations.

"The Ministry of Industry and Trade views Vietnam and the US as two complementary economies," Tan said, explaining that the trade imbalance is primarily due to the nature of their economic structures and export compositions.

Vietnamese goods exported to the US mainly compete with products from third countries rather than with American businesses in the US market. This, in turn, gives American consumers access to more affordable goods from Vietnam.

The deputy minister also emphasized that Vietnam pursues a free trade policy, with minimal tariff differences between Vietnamese and American goods. In the coming period, these differences are expected to narrow further as Vietnam continues reducing its most-favored nation (MFN) tariff rates on various products.

"As a result, some US products with high competitive advantages, such as automobiles, farm produce, liquefied natural gas and ethanol, will benefit from these policies, facilitating import flows from the US and improving the trade balance between the two countries," Tan said.

Vietnam and the US have a trade policy dialogue mechanism established under the Vietnam-US Trade and Investment Framework Agreement. In addition, the Vietnamese government has tasked relevant ministries to review obstacles and formulate remedies to US trade concerns.

Regarding investment, US foreign direct investment in Vietnam hit $11.94 billion in more than 1,400 projects at the end of 2024, making the US the 11th largest foreign investor in Vietnam. Most major US companies are operating successfully in Vietnam.

Tan reaffirmed Vietnam’s commitment to creating favorable conditions for US investors in key industries, including new energy projects, hydrogen, and nuclear power. This will also pave the way for increased imports of US liquefied natural gas, fuel, machinery, and technology.

In another move, the MoIT and relevant industry groups are preparing for various scenarios for domestic companies, however, they need to proactively track market trends, adapt to changes, and enhance their competitiveness.

"Businesses must develop well-defined strategies to diversify export markets, improve product quality, and meet technical, labor, and environmental standards," he said, urging companies to carefully manage the origin of raw materials and to exercise caution when entering into investment partnerships with firms from countries experiencing trade tensions with the US.