Vietnamese firms concerned about cheap imports in light of Trump's tax policy
Vietnamese firms concerned about cheap imports in light of Trump's tax policy
U.S. President Donald Trump has delayed the suspension of the de minimis provision, which allows packages worth less than US$800 to enter duty-free, but Vietnamese businesses remain concerned about the future of importing, specifically a wave of cheap imports.
Employees are at work at an essential oil factory in Vietnam. Photo: JULYHOUSE |
According to the U.S. executive action announced last week, the delay will last until adequate systems are in place for the Commerce Department “to fully and expediently process and collect tariff revenue.”
At about 10:00 am on Saturday, Hanoi-based HP Worldwide Cargo and Logistics JSC (HPW) informed customers about the inspection of goods related to the origin from China.
The U.S. 10-percent additional tariff on imports from China and temporary suspension of taxes on goods valued at under $800 will have a significant impact on the customs clearance time and process for e-commerce shipments into the North American country.
According to HPW, 'Made in China' orders not arriving from China to the U.S. via e-commerce platforms will face a fine of $5,000 apiece. This will coincide with a tax rate similar to goods sent directly from China.
To prevent impacts on goods shipped from Vietnam, HPW will randomly check goods, labels, and product origin to ensure that the merchandise has no Chinese origin or 'Made in China' labels and return products that do.
Unable to compete with mass-produced goods
Vietnam and Southeast Asia as a whole are predicted to continue to be hit by an influx of Chinese goods.
The trend of cooperation through joint ventures and mergers & acquisitions between Chinese and Vietnamese companies will increase.
Over the past few years, Chinese goods have flooded into the Vietnamese market at an increasing rate, particularly through e-commerce platforms like Temu, Shein, 1688, Alibaba, Shopee, and TikTok Shop, posing a significant challenge for domestic businesses, which have already been struggling with issues related to costs, branding, and consumers’ preference for cheap products.
Dao The Vinh, founder of the fashion brand Midori, told Tuoi Tre (Youth) newspaper that in 2024, many local traders and start-ups had to offload stock and reduce prices to as low as VND99,000 ($3.9) for each product like t-shirts, accepting losses to compete with Chinese rivals.
As a result, they ran out of capital and could not pay off debts to small factories, leading to the bankruptcy of both traders and producers.
According to Vinh, this clearly shows the reality of price competition, especially for mass-market products.
Tran Lam, founder of the brand Julyhouse, which specializes in natural essential oil-based products for home and personal care, claimed that Vietnamese enterprises face fierce competition. One of the biggest difficulties is pricing.
Cosmetics, essential oils, and household items imported from China are priced low due to large-scale production and cost optimization.
For example, a bottle of essential oil imported from China costs only VND30,000-50,000 ($1.2-2), while a similar product from a Vietnamese brand fetches VND60,000-80,000 ($2.4-3.2) due to differences in production, certification, and operation costs.
Vietnamese enterprises are also facing challenges from consumer behavior, as people are increasingly preferring cheap products.
Lam said consumers will compare prices, making it difficult for local brands to convince customers to choose quality products over cheaper goods.
He added that China heavily invested in cross-border logistic systems and facilities near the Vietnam border, making it easier for their commodities to reach Southeast Asian consumers without going through traditional import channels.
Production costs in China remain competitive thanks to large-scale supply chains and highly automated production systems.
Even with import taxes, their product prices are still lower than those produced in Southeast Asia, including Vietnam.
Since 2024, small traders have disappeared from e-commerce platforms.
Meanwhile, large factories have directly produced and sold products.
The direct-to-consumer model will become more prominent starting in 2025, said Vinh.
