When reciprocal tariff burden is shared

In the early hours of August 1, 2025 (Viet Nam time), the White House released President Donald Trump’s Executive Orders on further modifying reciprocal tariff rates. Under the new policy, the US decided to modify tariffs for 69 countries and territories. For Viet Nam, the reciprocal tariff was reduced from 46% to 20%. For transhipped goods, the same 40% tariff will apply to all 69 countries and territories.

According to the Ministry of Industry and Trade, this outcome is the result of sustained negotiations between the two countries since April. Guided by principles of openness, constructive engagement, equality, respect for independence, self-reliance, political systems, mutual benefit, and consideration of each other’s development level, Viet Nam and the US focused discussions on key areas, including tariffs, rules of origin, customs, agriculture, non-tariff measures, digital trade, services and investment, intellectual property, sustainable development, supply chains, and trade cooperation.

More than three months after being confronted with the shockingly high 46% reciprocal tariff first proposed by President Trump, most Vietnamese businesses now appear to have received the modified rate with composure. While the tariff the US applies to Vietnamese goods remains slightly higher (by around 1%) than for certain regional countries such as Thailand, Cambodia, and Indonesia, Viet Nam still enjoys a distinct competitive advantage over direct trade “rivals” that face higher rates.

Depending on the industry and product segment, Viet Nam’s competitive edge in the US market compared to other countries and territories has shifted. For example, in textiles and garments, according to Truong Van Cam, Vice Chairman and Secretary-General of the Viet Nam Textile and Apparel Association (VITAS), major suppliers to the US such as China and India are both subject to higher tariffs. In contrast, Viet Nam and Bangladesh share the same 20% rate, creating a “new playing field” with both challenges and opportunities.

Cam noted that Bangladesh benefits from lower production costs thanks to cheap labour and a degree of self-sufficiency in fabric supply. However, given that Viet Nam’s apparel exports to the US are structurally similar to China’s, Viet Nam is better positioned than Bangladesh to offset any supply gaps. Compared to countries with lower tariffs such as Thailand (19%) or Japan (15%), price-sensitive sectors like textiles, footwear, and wood products from Viet Nam will face greater competitive pressure in the US market. Yet, this should not be overly concerning if Vietnamese businesses can optimise costs and improve quality to retain customers.

An opportunity to affirm the role of a responsible trading partner

Returning to Viet Nam after nearly a month surveying the US market, Kim Minh Ngoc, Market Director of Kim Hoang Joint Stock Company, shared that they were not surprised by the officially announced tariff rate, and in fact had prepared contingency plans for even higher rates. Historically, the bottleneck for Vietnamese wooden furniture exports has been sourcing raw materials. However, with thorough preparation, achieving a localisation rate above 50% is not difficult, as domestic timber accounts for nearly 60% of supply. What is important, Ngoc stressed, is that Vietnamese authorities secure a specific export declaration format for the US market to simplify compliance for businesses.

Sharing this view, Nguyen Thi Minh Thanh, Deputy Director of Hung Thanh Wood Joint Stock Company (Bac Ninh Province), said the outlook for Viet Nam’s wood industry will remain bright if businesses adapt quickly, develop strategies to localise materials, ensure transparent origin verification, strengthen their foundations, overcome trade barriers, and maintain export growth momentum to the US.

For the shrimp export sector, citing July 2025 statistics, Le Hang, Deputy Secretary-General of the Viet Nam Association of Seafood Exporters and Producers (VASEP), said that US imports were valued at around 145.8 million USD. The decline was primarily due to the impact of the reciprocal tariff, which took effect on August 1, 2025, along with existing anti-dumping and anti-subsidy duties, which disrupted exports, reduced orders, and eroded market confidence. If this trend persists until December, there is a tangible risk of losing the US market for Vietnamese shrimp.

However, according to VASEP representative, Vietnamese shrimp exporters are currently focusing on processed, high-value products for the US – Viet Nam’s largest export market. If India, a direct competitor, sees its market share shrink due to a 25% tariff, some orders could be redirected to Viet Nam. In fact, many Vietnamese seafood companies have previously weathered similar shocks when the US repeatedly imposed anti-dumping duties on seafood imports from Viet Nam.

Viewing tariffs not as an endpoint but as a catalyst for change, Luong Hoang Thai, Head of the Trade Remedies Authority under the Ministry of Industry and Trade, said Vietnamese exporters have proven their resilience and ability to respond to challenges, and can continue to do so if they combine innovation, adaptability, and supportive policy measures. At this time, he stressed, businesses must remain focused, determined, and flexible to adapt. If they seize this moment to strategise and adjust, they can not only overcome the current tariff test but emerge stronger, more sustainable, and more competitive.

Reciprocal tariffs are not merely a pressure point, they are also an opportunity for Viet Nam to demonstrate adaptability, affirm its role as a responsible trading partner, upgrade its national value chain, transform towards sustainable growth, and prepare for deeper integration into global value chains.

Le Hang, Deputy Secretary-General, Viet Nam Association of Seafood Exporters and Producers (VASEP)