The first trade war with China was a boon for Vietnam — what about now?

Quang Ninh, Vietnam – When Le Ngoc Tram took on the role of sales manager for a new industrial park in northern Vietnam, the objective was to create a viable alternative for manufacturers looking to move out of China to avoid the tariffs resulting from the initial U.S.-China trade conflict. Fast forward three years, and with less than half of the 1,716-acre project completed, many companies interested in leasing the land are having doubts. The reason for their hesitancy lies in President Trump’s recently announced tariffs, including a 46% tax on imports from Vietnam, the country’s eighth-largest trading partner.

Although Trump declared a temporary 90-day halt on the new duties and the administration mentioned on Friday that certain electronics would be excluded from the “reciprocal” tariffs, Vietnam’s future remains uncertain.

A 46% tariff rate, surpassing that of most other nations, could render Vietnamese products uncompetitive in the U.S., its primary export market. This could prompt both buyers and producers of these goods to seek countries with lower rates, leading to a decline in industrial activity and foreign investment in Vietnamese manufacturing.

Vietnam’s economy has thrived in recent years, with manufacturing now contributing over one-fifth of the country’s GDP. However, Trump’s protectionist trade policies pose a threat to the boom that has fueled Vietnam’s economic progress for the past decade.

Despite the challenges, Vietnam has been proactive in seeking solutions. The country has offered to eliminate tariffs on American imports if the U.S. reciprocates, and has proposed measures to offset the impact of the tariffs, such as reducing corporate tax rates or providing more incentives for companies investing in local factories.

While Trump’s tariffs on Vietnam have caused concern, the country remains hopeful and is exploring ways to navigate the evolving trade landscape.