Lifting the second round of restrictions on trade and transportation.
On the morning of April 3, 2025 (Vietnam time), the administration of President Donald Trump unexpectedly announced a 46% retaliatory tariff on Vietnamese goods exported to the United States. With export turnover to the US reaching $119 billion (nearly 30% of total exports), this tariff could seriously impact the Vietnamese economy.
Dr. Nguyen Hong Thach(ISEAS Institute Singapore)
April 10, 2025
On the morning of April 3, 2025 (Vietnam time), the administration of President Donald Trump unexpectedly announced a 46% retaliatory tariff on Vietnamese goods exported to the US, shocking the public as it far exceeded the predicted 10%. Although the US later postponed the tariff for 90 days (excluding China), the threat from the high tariff remains. With export turnover to the US reaching $119 billion (nearly 30% of total exports), this tariff is a significant threat.(1)This tax rate could seriously impact the Vietnamese economy.
If prolonged, high tariffs will severely impact key export industries such as electronics, textiles, footwear, and furniture – many businesses that depend more than 50% of their revenue on the US market. This could lead to a drop in orders, increased inventory, and disrupted cash flow. Other industries such as seafood, agricultural products, and mobile phones will also likely experience ripple effects.
At the macro level, with a 46% tariff, according to calculations by Dragon Capital Investment Fund, a decline in exports could lead to a decrease in GDP of 1.4-2 percentage points.(2)This could lead to the risk of job losses for millions of workers in labor-intensive industries. Trade instability also affects investment and Vietnam's position in the global supply chain. If tensions escalate, corporations may move production to other countries such as Malaysia or Mexico. Financial markets, stock exchanges, and exchange rates could also come under pressure from investor concerns and the trade deficit with the US.
It's noteworthy that the US complains not so much about Vietnam selling a lot to the US, but rather about the difficulty the US faces in selling goods to Vietnam. In Vietnam-US trade relations, non-tariff barriers are considered one of the direct causes of the US decision to impose a 46% tariff. The White House Council of Economic Advisors estimates that US goods exported to Vietnam would face an "equivalent tax" of up to 90% if non-tariff barriers are included.(3)Consequently, Washington imposed a retaliatory tariff of 46% to "compensate" for the disadvantage.
In reality, the average tariff that American goods face in Vietnam is only about 15%, while the tariff difference between the two countries is only about 7%.(4)However, non-tariff barriers such as technical regulations and complex administrative procedures are often perceived by partners as unfair trade practices, providing grounds for retaliatory measures.
Non-tariff measures are considered a key issue in the implementation of U.S. reciprocal tariffs and are a major focus of current U.S. trade negotiations with partners. This is clearly demonstrated in President Trump's message on April 21, 2025, when he posted on social media eight issues he called "non-tariff cheatings."(5).
One of the main reasons for maintaining non-tariff barriers is to protect domestic production, especially in nascent industries. However, some industries still fail to develop and even become less competitive in international markets.
Measures such as import licensing, stringent inspections, or complex technical regulations may provide short-term relief for domestic businesses. However, without accompanying institutional reforms and productivity improvements, protectionism will lead to dependence instead of innovation. Protectionist policies should only be temporary, targeted, and have a clear withdrawal roadmap. Now is the time to review what we should keep and what we should open up, rather than keeping everything closed to the outside world.
Without transparent design and regular effectiveness assessments, non-tariff barriers can easily become obstacles, undermining the very industries they are intended to protect. This is also a bottleneck in the institutional framework that General Secretary To Lam has directly addressed and demanded be removed for sustainable economic development.
History shows that whenever faced with a crisis, Vietnam is forced to implement drastic reforms to survive and develop. 1986 was such a turning point. At that time, the economy was in crisis: inflation exceeded 700%, there were food shortages, and the country was under embargo. The Sixth National Congress initiated the reform process, abolishing the subsidy system and removing domestic barriers, paving the way for a smoothly functioning market. Within just a few years, Vietnam transformed from a country suffering from food shortages to a leading rice exporter, inflation plummeted, people's lives improved, and the country began to integrate internationally.
In the current context, the 46% tariff that the US plans to impose on Vietnamese goods is a strong warning. If in 1986 we succeeded in removing domestic barriers, today Vietnam needs to remove those "barriers" on the international stage – that is, review and remove unnecessary non-tariff barriers, increase transparency in procedures, and expand market access for partner goods. This is not only a solution to alleviate pressure from the US, but also a necessary step for Vietnam to continue its deep and sustainable integration.
Ninety days is a very short time for us to make decisions to resolve the crisis caused by the sudden changes in the international economic environment. Focusing on negotiating tariffs will not solve today's problem. Vietnam's purchasing power for American goods is also limited. Reforming the system of non-tariff barriers is not for our partners, but for ourselves. We need to be determined to reform in order to continue developing.
(1) https://tuoitre.vn/my-ap-thue-46-doanh-nghiep-chuyen-huong-tinh-ke-tim-den-ga-khong-lo-moi-an-do-trung-dong-20250409150633569.htm
(2) https://vneconomy.vn/cac-nha-dau-tu-nuoc-ngoai-noi-gi-ve-thue-suat-46-my-ap-len-hang-hoa-viet-nam.htm#
(3), (4)https://vneconomy.vn/cac-nha-dau-tu-nuoc-ngoai-noi-gi-ve-thue-suat-46-my-ap-len-hang-hoa-viet-nam.htm#
(5) Trump names '8 non-tariff sins' in Easter post, threatens trade payback - The Economic Times
