Vietnam’s export resilience tested amid rising US tariff pressure

Vietnam’s export resilience tested amid rising US tariff pressure

As the United States slaps a 20 per cent countervailing tariff on Vietnamese exports, concerns loom over the policy's implications for Vietnam's growth trajectory. Despite mounting trade headwinds, Le Trung Hieu, deputy director general of the National Statistics Office, outlines why the country remains confident of meeting its ambitious target of over 8 per cent GDP growth in 2025.

Le Trung Hieu, deputy director general of National Statistics Office

Could you elaborate on how the countervailing tariff will affect Vietnam’s economic growth, based on the National Statistics Office (NSO)'s calculations?

As the national statistics agency responsible for calculating economic growth rates, the NSO reevaluates the growth rate whenever any input factors impacting GDP growth change. Based on these recalculations, the NSO then proposes policies and mechanisms to minimise any negative impacts, while also leveraging other input factors to achieve the growth targets set by the government.

The United States is Vietnam’s largest export market, and bilateral trade relations have strengthened in recent years. The US is now one of Vietnam’s top trading partners, with Vietnam's export share to the US steadily increasing over the past few years.

Key export items to the US include computers, electronics, and components which hold 19.4 per cent of Vietnam’s total export value to the US; machinery, equipment, and parts at 18.5 per cent; textiles and garments at 13.5 per cent; phones and components at 8.2 per cent; wood and wood products at 7.6 per cent; and footwear at 6.9 per cent.

The 20 per cent countervailing tariff imposed by the US on Vietnamese goods will certainly affect Vietnam’s production and business activities, foreign and domestic investment, and economic growth in both the short and long term, particularly if US trade policy remains unchanged towards Vietnam and other US trade partners.

How did you arrive at your specific calculations regarding the impact of the tariff?

We used the Input-Output (I/O) Table framework to evaluate the impacts from both the supply and demand sides, assuming a reduction in the value of Vietnam’s exports to the US as a result of the higher tariffs.

Currently, the US applies an average Most Favoured Nation (MFN) tariff of 9.4 per cent on Vietnamese imports, with agricultural products taxed at 17.1 per cent and non-agricultural products at 8.1 per cent.

Using export data from Vietnam’s top 46 major product categories to the US, we calculated that a 10 per cent drop in export value due to these higher tariffs would result in a reduction of Vietnam’s GDP growth by 0.08 percentage points.

Specifically, the direct impact on GDP would be a 0.07 percentage point decrease, while indirect effects, such as spillover impacts through inter-industry relationships, would lower GDP by an additional 0.01 percentage points.

What would the actual impact of the 20 per cent countervailing tariff be on Vietnam’s GDP growth?

At a 20 per cent countervailing tariff, the price of Vietnamese goods in the US will increase by approximately 9.7 per cent. Based on our calculations using the I/O Table, a 20 per cent tariff would reduce Vietnam’s export value to the US by $11-12 billion, or approximately a 9-10 per cent drop in total export value.

For certain product categories, this will lead to significant reductions in export value. For example, textiles, garments, electronics, phones, and computers are expected to see a 4 percentage point drop.

Other categories, such as measuring, testing, control equipment, and watches, may experience a 5.3 percentage point reduction, while footwear, bags, and luggage could see a 4 percentage point decline.

Additionally, machinery, equipment, and spare parts could fall by 4.1 percentage points, while wood products and seafood may decrease by 2.6 percentage points. Some agricultural products, such as pepper, catfish, vegetables, cashews, coffee, and shrimp, could see a drop of about 1.4 percentage points.

But aren’t these just theoretical calculations based on economic models?

Yes, the US has already announced its tariff rates for various trading partners. Vietnam’s 20 per cent countervailing tariff is relatively high compared to several other countries like Indonesia, Cambodia, Malaysia, the Philippines, Thailand, and Pakistan, direct competitors in the US market, particularly in textiles, footwear, and agricultural products, but the differences are not significant.

Countries like India and Bangladesh, which are also key competitors for Vietnamese goods in the US market, face tariffs of 25 per cent and 20 per cent, respectively. As a result, Vietnam's goods will remain competitive in the US market, even if prices increase by about 9.7 per cent.

This is because prices of goods from other countries will increase as well, and in fact, Indian products may lose some competitive edge due to the higher tariffs.

With a 20 per cent tariff, Vietnamese products will still be competitive in the US market. The 0.8 percentage point decrease in GDP growth is a calculation based on economic theory.

According to our statistics, during the first seven months of 2025. The country’s export value reached an estimated $261.8 billion, showing a 14.6 per cent jump on-year. The US remains Vietnam’s largest export market, and the growth trend continues.

On the import side, Vietnam’s total import value over the first seven months came to more than $252 billion, marking an 18 per cent increase.

This reflects a rebound in production and exports, prompting businesses to import more raw materials to complete export orders. If Vietnam can maintain the export growth pace seen in the first seven months, it is highly likely that the country’s GDP will exceed 8 per cent growth this year.

VIR