Outlook of US tariffs impact on Vietnam

THE HANOI TIMES — Vietnam is among the hardest-hit US trading partners under US President Trump’s tariffs. 

Adam Sitkoff, Executive Director of the American Chamber of Commerce (AmCham) in Hanoi, told The Hanoi Times about his views on the broad impact of the new tariffs on Vietnam’s economy and US-Vietnam trade relations.

What do you think of Vietnam's approach to balancing its trade with the US?

Vietnam has been proactive in anticipating tariffs and attempting to address trade imbalances by offering economic incentives. Recent visits by Vietnamese officials to the US demonstrate cooperation willingness. However, symbolic gestures like reducing tariffs on US cherries or signing non-binding agreements are unlikely to satisfy the Trump Administration, which prefers concrete deals.

What should be Vietnam's priorities in the long term?

Vietnam should improve business conditions for US companies, resolve  trade issues, and secure tangible agreements rather than memoranda of understanding (MOUs). The government is likely developing multiple response strategies while monitoring how other countries negotiate with Trump.

Vietnam should engage in negotiations with the US, leveraging its economic contributions. A free trade agreement or adjustments through existing frameworks like the Trade and Investment Framework Agreement could help mitigate the impact.

If tariffs remain, Vietnam must navigate economic challenges, but it still has strong trade relationships with Japan, the EU, and other nations. At the same time, there should be diplomatic negotiations to secure a better trade deal with the US.

Despite the tariffs announced, what are the prospects for US-Vietnam trade relations?

The outlook for US-Vietnam trade remains positive, with both trade and investment growing steadily as American companies expand their presence in Vietnam. While challenges exist, Vietnam’s strategic importance continues to attract US businesses, and the country is seen as having a bright future.

In addition, the US remains a key investor, and this relationship is expected to strengthen in the coming years. US investments are likely higher when factoring in subsidiaries.

Will the tariffs hurt two-way trade?

It’s uncertain. Trade levels will depend on factors like consumer demand, supply chain adjustments, and how companies navigate tariffs. However, Vietnam cannot simply replace the US as its largest export market, making long-term economic ties inevitable.

What’s the long-term goal for trade relations?

It includes lower barriers to market access and fewer trade restrictions. Both the countries benefit from open trade, and while short-term disruptions may occur, the broader goal should be fostering an environment where businesses can operate freely and competitively.

Do you think that President Trump's tariff policy on Vietnam is the right one?

It's a different decision than I would make, but the US is a sovereign country and can act within international law. Trump's tariffs on Vietnam and other countries were imposed under a rarely used 1977 US law, demonstrating his longstanding belief that trade imbalances harm the American economy.

What is possible impact on Vietnam?

The tariffs will hurt Vietnam’s economy, leading to reduced exports, lower consumer demand in the US, and factory slowdowns. Some economists predict a GDP impact of 2.5%, though exact numbers are uncertain. Vietnam’s ambitious 8 - 10% growth target will become harder to achieve.

How about Vietnamese companies' adaptability?

Supply chains are complex, and shifting production is costly and time-consuming. Companies may not immediately relocate, but they will seek ways to minimize losses. It's hard to make decisions following Trump's uncertain policy shifts. 

Thank you.