WASHINGTON — Vietnamese Prime Minister Pham Minh Chinh has instructed his Cabinet to prepare for a possible global trade war following the announcement by U.S. President Donald Trump, who imposed tariffs of 10% on all Chinese products.
“Prepare for the possibility of a world trade war this year,” the Prime Minister stated during a Cabinet meeting on Wednesday, as reported by the Dan Tri online newspaper.
Pham’s comments came after Trump declared a pause in the threatened tariffs against Mexico and Canada for 30 days. He emphasized that the global and regional situations are “developing very unpredictably, directly affecting our country, especially on exports, production and business, and the macro economy.”
The potential for a global trade war raises concerns about retaliatory tariffs, which could disrupt supply chains and narrow Vietnam’s export markets, thereby posing significant risks to the Vietnamese economy.
Although Pham did not specifically reference Trump’s tariffs on Chinese products, there are rising fears that these tariffs may increase product prices and diminish consumer purchasing power in Vietnam. The Vietnamese economy is highly open and relies heavily on exports and foreign direct investment, with China being its leading trade partner.
Vietnamese businesses and consumers are preparing for U.S. tariffs on China to elevate costs of certain goods, particularly as the country imports machinery and electronic devices from the U.S., which often contain components sourced from China.
Analysts predict that Vietnam may face pressure from Beijing to import more Chinese products as the U.S. imposes higher tariffs on these items. Nguyen Quang A, an economic political observer and businessman in Hanoi, noted, “Vietnam may be under pressure to import more products from China as Chinese products are levied higher tariffs by the U.S.”
There are expectations that as American markets tighten for Chinese companies, those businesses may increasingly seek out regional trading partners, such as Vietnam. In 2024, Vietnam’s exports to China reached $61.2 billion, while imports surged to $144 billion, according to the Vietnam Chamber of Commerce and Industry.
In contrast, with the United States, Vietnam experienced a trade surplus in 2024 that exceeded $123 billion, as reported by Reuters. Analysts suggest that Hanoi’s commitments to import more from the U.S. and other offsetting measures could help Vietnam navigate the tariffs imposed by the Trump administration.
Nguyen pointed out a significant hidden risk for Vietnam: Chinese companies setting up factories within Vietnam to import products solely for re-export. This practice allows them to repackage Chinese products with minimal labor from inexpensive Vietnamese workers and export them under the “Made in Vietnam” label to circumvent tariffs. “Chinese businesses [are] moving to Vietnam and are processing their imported materials from China and then labeling their products as ‘Made in Vietnam’ before exporting to the U.S. The U.S. will definitely examine this issue carefully,” Nguyen said.
Given Vietnam’s long-standing geopolitical tensions with China, there are risks of retaliatory measures from Beijing, which has indicated it will impose tariffs on some U.S. goods shortly.
Nonetheless, Vietnam seemed to gain significantly in Trump’s first-term trade war with China, attracting manufacturers seeking to avoid Chinese tariffs. If Trump’s tariffs extend to Vietnam, the economic consequences could ripple across trade balances, exchange rates, supply chains, and foreign direct investment, stated Vo Tri Thanh, former vice president at the Central Institute for Economic Management and a member of the National Financial and Monetary Policy Advisory Council, in Vietnam News.
The sweeping tariffs have triggered a phenomenon of goods being stockpiled in Vietnam and the region to avoid tax hikes, which has increased demand for container shipping and driven freight costs to new heights.
Despite these pressures, Vietnam may find itself well-positioned to capitalize on shifts in global supply chains. Nguyen Hong Dien, Vietnam’s Minister of Industry and Trade, explained to Tuoi Tre Online that the country could attract more investment in high-value sectors.
