Exporters cautiously optimistic, prepare for US tariff impacts

Exporters cautiously optimistic, prepare for US tariff impacts

While high tariffs are daunting, they could also be a catalyst for industry upgrades, encouraging the development of Vietnamese textile brands, investment in domestic raw materials and localisation.

Workers at a fruit packaging company in Đồng Nai. Enterprises have recognised the challenge and taken adaptive measures to maintain their presence in the US market. — VNA/VNS Photo Vũ Sinh

Vietnamese exporters have been focused on clearing all existing orders and using the remaining time before US tariffs take effect to maximise production and ship out what they can, while also preparing strategies to adapt, said insiders and experts.

Chairman of the HCM City Union of Business Associations Nguyễn Ngọc Hòa said that in the past month, following the US announcement of reciprocal tariffs on Vietnamese goods, enterprises have recognised the challenge and taken adaptive measures to maintain their presence in the US market.

Although the US tariff shock poses significant challenges, it also presents opportunities. CEO of Meet More Nguyễn Ngọc Luận said that coffee exports to the US currently account for about 30 per cent of his company’s total. The initial news about the tariffs in early April caused widespread concern.

Luận said that after the initial panic, things have returned to normal. Businesses are still exporting as usual, since there is a 90-day grace period before the new tariffs are enforced. He said, however, it’s a good idea to start preparing for the possibility that exports to the US could drop by 30–40 per cent initially. To counter this, Luận considered expanding into other markets, with Australia and South Korea performing well. Over the past month, he has travelled to Australia to expand his distribution system and customer base. 

Phạm Văn Việt, vice chairman of the HCM City Association of Garments, Textiles, Embroidery and Knitting, said that textile and garment firms are ramping up production in Q2 to ship as much as possible before the July 9 tariff deadline. Last year, the industry grew by only 9.6 per cent. This year, with signs of recovery, the sector is targeting 16 per cent growth. Q1 performance was strong, with 11.6 per cent growth — a positive sign.

According to Việt, if the US imposes the proposed tariffs, Việt Nam’s textile sector, while burdened with higher taxes, will at least be able to compete on a more level playing field. In the past, Việt Nam has suffered disadvantages — Mexico, for example, currently faces 0 per cent tariffs, while Việt Nam pays up to 15.2 per cent. Under the new policy, if both countries are taxed at 25 per cent, competition will be fairer.

While high tariffs are daunting, they could also be a catalyst for industry upgrades, encouraging the development of Vietnamese textile brands, investment in domestic raw materials and localisation. The goal is to raise the industry’s localisation rate to 60 per cent by 2030. Businesses are also restructuring supply chains to reduce input and output risks.

Bracing for impact

Phùng Quốc Mẫn, Chairman of the HCM City Association of Handicraft and Wood Processing, said that the wood industry’s total export turnover is expected to exceed US$16 billion in 2024, with $9 billion — or 55 per cent — going to the US. Despite initial concerns, companies are now focused on completing all outstanding shipments while preparing contingency plans.

The association has surveyed 50 major member companies, held discussions with 20 large FDI firms and met with 20 US buyers to exchange information and explore joint responses.

“We’ve started planning for post-grace period solutions. Sellers and buyers alike must prepare to share the burden in a realistic way. Maybe it’s a 50-50 split, or perhaps one-third each among sellers, importers and consumers. We’re also exploring ways to balance trade by increasing imports of production materials,” Mẫn said.

Hòa urged Government agencies to act decisively to reduce administrative and business procedures by 30 per cent, as encouraged in Resolution 66. Only by streamlining bureaucracy can businesses see a real drop in procedural costs.

Vietnamese firms are also facing tougher competition in the domestic market, as exporters from other countries who are unable to access the US shift their focus to Việt Nam.

“I propose that all ministries and sectors approach this issue with the same urgency we’re applying to administrative reform and streamlining government at two levels. The Government should assign specific reduction targets to each ministry, with clear deadlines — only then can we track how many unnecessary procedures are actually being eliminated,” Hòa added. 

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