Continuing the growth momentum from 2024, Vietnam's wood exports reached USD 3.95 billion in the first quarter of 2025, marking an 11.6% year-on-year increase. March alone accounted for an estimated USD 1.5 billion in wood and wood product exports.

The United States remained Vietnam’s largest export market for wood and wood products, making up 53.1% of total exports. Japan and China followed, accounting for 13.2% and 10.6%, respectively.

Despite this robust performance, the wood sector continues to grapple with considerable challenges.

A large proportion of Vietnam’s wood businesses are small and medium-sized enterprises (SMEs), many of them family-run operations. These firms are particularly vulnerable to market fluctuations and often struggle with the modernization of production and processing technologies.

Wood industry needs to calmly respond to tariff "storm". (Photo: ngkt.mofa.gov.vn)

Supply-side constraints also persist. Vietnam lacks a stable domestic supply of large-diameter wood, forcing companies to rely heavily on imports. This dependency not only inflates production costs but also diminishes the competitiveness of Vietnamese wood products in global markets.

Additionally, while demand remains steady in core export destinations, Vietnam’s wood exports remain overly concentrated in a few key markets. Such market dependence poses long-term risks, especially amid ongoing global geopolitical uncertainty.

U.S. tariffs threaten industry outlook

Ngo Si Hoai, Vice President and Secretary-General of the Vietnam Timber and Forest Product Association (Viforest), has recently addressed the mounting challenges and urged businesses to prepare for market headwinds.

Among the most pressing concerns is the U.S. government’s decision under President Donald Trump to impose a 46% reciprocal tariff on Vietnamese imports. This move directly impacts Vietnam’s agricultural and wood exports to the U.S.—Vietnam’s most valuable export market for agricultural, forestry, and seafood products.

In 2025, Vietnam’s agriculture sector aims to generate USD 18 billion in wood and wood product exports, up USD 2 billion from the previous year. The U.S. remains the target market for much of this growth. However, the tariff policy casts a shadow over these ambitious goals.

The stakes are especially high for the wood sector, which generates the largest trade surplus among Vietnam’s agricultural exports to the U.S. Over the past four years, U.S. imports of Vietnamese wood products have consistently ranged from USD 7–9 billion annually, accounting for over 50% of Vietnam’s total wood exports. In contrast, Vietnam imports only around USD 300 million in wood products from the U.S. annually—USD 316 million in 2024, for example.

The sudden announcement of a 46% tariff—nearly double the 25% that was previously anticipated—has shocked the industry.

Compounding the issue is an ongoing investigation under Section 232 of the U.S. Trade Expansion Act of 1962, which assesses whether wood imports pose a threat to national security. While this probe has yet to result in new duties, the possibility remains on the table.

In the short term, Hoai advises Vietnamese businesses to ship goods before any final ruling or tariff enforcement, aiming to minimize losses and reevaluate operations.

Broader strategy needed beyond the U.S.

One of the key strategies being pursued by Vietnam’s agriculture ministry is to prove the complementary—not competitive—nature of U.S. and Vietnamese agricultural products, including wood. This argument is central to ongoing trade negotiations.

At a recent meeting with the U.S. Ambassador, Vietnam’s Minister of Agriculture and Environment, Do Duc Duy, emphasized that the two countries' agricultural exports are mutually supportive and should not be seen as adversarial. He also affirmed Vietnam’s openness to importing more U.S. agricultural goods.

To that end, Viforest in coordination with local trade associations, exporters, and relevant ministries, is preparing to participate in upcoming hearings. Their goal: to demonstrate that Vietnam-U.S. wood trade is mutually beneficial and poses no threat to the U.S. domestic industry.

Still, Hoai cautioned that diplomacy alone may not suffice: “We need to do more than just talk. The key now is for Vietnamese agencies and enterprises to consider increasing imports of U.S. wood products—such as sawn timber, logs, and veneer—in order to rebalance trade and underscore the benefits of cooperation.”

Beyond immediate responses to U.S. tariff threats, Hoai urges businesses to diversify their export markets. Japan and China, though significant buyers, currently import mainly wood pellets and chips. These relationships should be deepened and expanded to include higher-value products. Emerging markets like the Middle East also offer untapped potential.

Another critical area is raw material sourcing. To build a strong and competitive wood industry capable of meeting international demand, businesses must invest in sustainable, legal timber supplies with forest management certification. This is essential not only for increasing export orders but also for meeting the country’s broader sustainability goals.

“Looking ahead, Vietnamese wood businesses must transition away from original equipment manufacturing (OEM) toward original design manufacturing (ODM) and, eventually, original brand manufacturing (OBM). Building design and brand capabilities will be crucial to enhancing competitiveness and long-term profitability.” - Hoai explained.