Most US manufacturers forecast layoffs at Vietnam operations with Trump tariffs, survey shows
Most US manufacturers forecast layoffs at Vietnam operations with Trump tariffs, survey shows
Most U.S. manufacturers surveyed by the American Chamber of Commerce in Vietnam said they would be likely forced to lay off workers if the Trump administration imposed tariffs on the export-reliant Southeast Asian country.
A file photo of shoes for export being seen at a shoe factory in Hanoi, Vietnam, December 29, 2020. Photo: Reuters |
The survey was conducted from February 4-11 over the period when U.S. President Donald Trump had already approved 25-percent tariffs on steel and aluminium and had pre-announced broader reciprocal tariffs on countries with trade imbalances, and sector-specific duties on semiconductors, cars and pharmaceuticals.
"Among manufacturers, nearly two-thirds foresee potential layoffs," AmCham said, noting the percentage fell to less than half for all businesses.
The survey is based on input from more than 100 of AmCham Vietnam's members, which include big multinational companies such as Intel and Nike.
Vietnam has profited in recent years from big investments by manufacturers that transferred operations from China after Trump imposed tariffs on Beijing in 2018 during his first term.
More than 60 percent of the country's US$500 billion stock of foreign investment is in manufacturing, according to data from Vietnam's government updated to the end of January.
Foreign investors with manufacturing operations in Vietnam had largely remained upbeat after Trump's announcements of tariffs on China, Mexico and Canada at the start of his second presidential term, according to conversations Reuters had with a dozen industry specialists.
But the mood has partly changed with the new tariff threats.
"Everybody was expecting problems but frankly we've been surprised by the so-called reciprocal tariffs as it is a very odd measure," said an investment adviser with a long experience in the country. He declined to be named to speak more freely.
Multiple analysts have said Vietnam may become a target of new duties due to its huge trade surplus with the U.S., the fourth biggest among U.S. partners, and may be hit hard by tariffs on semiconductors as it is one of the top chip exporters to the U.S.
Investors in Vietnamese shares accelerated sales in recent weeks.
New export markets
The survey, conducted by the AmCham section in Vietnam's business hubs of Ho Chi Minh City and Danang, found that 81 percent of respondents expressed concern about potential tariffs, with the percentage growing to 92 percent among manufacturers.
"Many businesses fear that increased costs due to tariffs could disrupt supply chains and force them to rethink their operations," AmCham said in a press release, noting 94 percent of manufacturers expected a negative impact.
AmCham said 41 percent of respondents were considering diversifying their business away from the U.S. market, which is the most important for Vietnam at the moment.
"This shift could see companies redirecting exports to other markets or adjusting supply chains to reduce their reliance on the U.S.," AmCham said.
Companies in other countries are also expressing concern about the impact of U.S. tariffs. Almost nine out of 10 Japanese firms expect Trump's policies to negatively affect business, a Reuters survey showed on Thursday.
