Vietnam's manufacturing sector stays positive amid US reciprocal tariifs

The new US tariffs led to another contraction in Vietnam's manufacturing sector in April, but firms remain optimistic and await positive sales growth, according to a latest report from S&P Global.

In addition, the lack of demand meant that firms continued to lower selling prices, while input costs rose only slightly.

"The imposition of tariffs by the US knocked the Vietnamese manufacturing sector into contraction during April, with firms reporting sharp declines in new orders, exports and production," said Andrew Harker, Economics Director at S&P Global Market Intelligence.

“The potential for further disruption to the sector as a result of additional tariffs meant that business confidence slumped," he added.

The S&P Global Vietnam Manufacturing Purchasing Managers' Index (PMI) dropped back below the 50.0 no-change mark in April at 45.6, after having signaled growth for the first time in four months during March.

Manufacturing new orders decreased in April, reversing the expansion seen in March.

Respondents indicated that the drop in new orders reflected the US tariff impact and international market fluctuations. As a result, production fell again after rising in March.

Despite the challenges, some manufacturing and export-oriented enterprises have recently shown signs of stabilization.

Song Hong Garment Corporation is an example. At its shareholders' meeting late last month, it announced that orders had been secured through July-August, with the US remaining its main export market.

During the 90-day tariff suspension period, Song Hong received requests from clients to accelerate delivery schedules to take advantage of the temporary window. While tariff uncertainties remain, the company has set targets for this year, aiming for revenue growth of over 4% and pre-tax profit growth of more than 10%.

Aquaculture firm Vinh Hoan has built its 2025 revenue forecast with trade disruptions in mind, but still sees opportunities for profit growth. So far, the company has not encountered any major risks related to order volumes, especially in the US market.

Similarly, Duc Giang Chemicals reported a 17.8% year-on-year increase in sales in the first quarter, driven by growth in the yellow phosphorus (P4) segment. Rising demand for semiconductors continues to support this segment's momentum. Export revenue rose by 20% in the first quarter, outpacing domestic market growth of 13.2%.

While input costs continued to increase amid higher prices for some raw materials, the pace of inflation was only modest and the weakest since the current sequence of rising operating costs began in August 2023. Some firms noted lower costs for oil and transportation. Selling prices fell for the fourth consecutive month.