Opportunities Amid Tariff Risks: Vietnam Aims for Trade Balance with the US

US President Donald Trump has announced that he will reveal his government’s tariff scheme on April 2, referring to it as a potential “Liberation Day” for the US economy. As this date approaches, the Vietnamese government is expediting its initiatives to strike a more balanced trade with the US, pledging to increase purchases of American goods and reduce tariffs on various US products.

Vietnam’s trade surplus with the US surged to a new record in 2024, placing it fourth in terms of trade imbalance with the US, behind only China, the European Union (EU), and Mexico. According to official data, the trade surplus last year increased by almost 20 percent, reaching over US$123 billion. The growth rate is significantly higher than that of China, the EU, and Mexico, which were 6, 13, and 12.5 percent, respectively.

Despite the official target list not yet being announced to the public, many anticipate a high chance that Vietnam will be named. To avoid the prospect, Vietnam’s government, along with its businesses, is exploring offsetting measures in the hope of demonstrating to the US its willingness to establish a more balanced and sustainable trade partnership.

This article examines the country’s ongoing efforts, as well as the new opportunities arising from the latest steps to improve the trade balance between the two countries.

The direct pledge by Vietnam’s Prime Minister

On March 18, during a working meeting with representatives from 64 US companies organized by the US-ASEAN Business Council, Vietnamese Prime Minister Pham Minh Chinh urged US businesses to keep advising and providing policy suggestions to the Vietnamese government to enhance its institutions and policies.

Notably, in an effort to garner more support for Vietnam’s initiatives, Prime Minister Chinh has made direct appeals to US businesses regarding measures to improve the trade balance between the two countries. Accordingly, he encourages U.S. businesses to take proactive steps to:

• Engage with the Trump administration to promote sustainable economic, trade, and investment cooperation between the two nations;
• Establish a new bilateral trade framework that better addresses mutual needs and realistic conditions;
• Advocate against the implementation of trade defense measures on Vietnamese exports and actions that could jeopardize the strong relationship between the two countries; and
• Support a swift recognition of Vietnam’s market economy status and the removal of Vietnam from the US Department of Commerce’s list of high-tech export restrictions.

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In addition, PM Chinh has affirmed his government’s commitment to promoting balanced, harmonious, and sustainable development of US-Vietnam economic and trade relations through specific action programs, addressing concerns of US firms, and enhancing the quality and effectiveness of investment cooperation with the US. He emphasized that Vietnam consistently views the US as a leading, important, and strategic partner, particularly in terms of economics, trade, and investment.

Vietnam to reduce tariffs on US goods

A week before Trump’s deadline, on March 26, Vietnam’s Ministry of Finance (MOF) announced that it would introduce a decree on tariff reductions for several US imports within the same month. The tariff cut scheme will tentatively be as follows:

• Liquefied natural gas (LNG), reduced from 5 to 2 percent;
• Automobiles, reduced from 45-64 to 32 percent;
• Ethanol, reduced from 10 to 5 percent; and
• Ethane, with full removal.

The aforementioned scheme is part of a broader proposal on tax policies that the MOF has presented to the government to enhance Vietnam’s trade competitiveness and adjust its tariff structure to align with global economic changes. While demonstrating its commitment to supporting fair trade, Vietnam still needs to strike a balance between the plan and the benefits of its other trading partners. Thus, the MOF has confirmed that the new tax rates will not be lower than those established by current FTAs.

In addition to import taxes, the MOF is also reevaluating excise taxes, environmental protection taxes, and value-added taxes to create a balanced and competitive tariff system.

New deals to balance out trade between the US and Vietnam

At a meeting on March 14 between Vietnam’s Industry and Trade Minister Nguyen Hong Dien and US Trade Representative Jamieson L. Greer, Vietnamese and US companies signed cooperation agreements and purchase contracts totaling US$54.3 billion, which include:

• The acquisition of machinery, equipment, raw materials, services, and goods valued at US$4.15 billion; and
• The purchase of aircraft procurement, aviation services, oil and gas extraction, and imported petrochemical products, totaling US$50.15 billion.

Companies from both nations are in talks and are anticipated to finalize contracts and agreements totaling around US$36 billion soon. The cumulative value of the economic and trade agreements established between the firms of both countries, set to be implemented starting in 2025, is projected to reach US$90.3 billion. Vietnam’s Ministry of Industry and Trade reports that these collaborations will generate hundreds of thousands of jobs for workers in both countries.

During the meeting, the US Trade Representative conveyed gratitude for what he viewed as Vietnam’s proactive efforts and clear goodwill in tackling ongoing US concerns.

SpaceX’s Starlink to enter Vietnam market

On March 26, Vietnam’s government announced that it would permit SpaceX to initiate its Starlink satellite internet service on a trial basis within the country.

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The government stated that there are no restrictions on foreign ownership of this service, and the trial period will extend until the end of 2030. It remains unclear whether SpaceX has submitted an application for a license to operate its service in Vietnam. According to the statement, the company can offer fixed and mobile service plans across Vietnam, including during flights. However, the government has set a cap of 600,000 subscribers for the trial period statement.

Also read: Elon Musk’s SpaceX and Suppliers Bet Big on Vietnam

US firms demonstrate commitments to Vietnam’s market

Amid concerns that Vietnam may be affected by US tariffs due to its trade surplus with the US, a delegation of 64 US companies made a three-day visit to the Southeast Asian nation from March 18 to 20. This visit has underscored the growing interest of US businesses in Vietnam’s market, as well as the local government’s prompt actions to address trade-related issues.

During talks with Vietnam’s leaders, USABC President and CEO Ted Osius acknowledged the challenges posed by global trade uncertainties, including tariff risks, while emphasizing the US. business community’s commitment to enhancing trade and investment in Vietnam.

Arriving just before the Health & Life Sciences Industry Mission from March 20 to 21, this visit represents a significant strengthening of the partnership between the two countries, now over a year into a comprehensive strategic alliance. Notable companies in the delegation include Apple, Intel, Coca-Cola, Nike, Boeing, Amazon, Exxon Mobil, JPMorgan, Visa, and Meta. These firms seek to explore new opportunities across a wide range of sectors, such as information technology, financial services, logistics, manufacturing, energy, aerospace and defense, healthcare, consumer products, food, and agriculture.

Opportunities for US-Vietnam economic cooperation amidst tariff risks

Although US tariffs might pose significant risks to global trade, including that of Vietnam, they also present an opportunity for businesses from both countries to strengthen their connections, as both sides strive for the common goal of achieving trade balance. Through recent discussions between the two sides, certain sectors have emerged as the most promising for future collaborations.

Energy

Pacifico Energy Group has outlined its investment plans in Vietnam, emphasizing the potential for offshore wind power development. They expressed a commitment to improving energy security through collaboration with Vietnam. A representative highlighted the Vietnamese government’s positive steps in fostering a welcoming business environment and eliminating barriers to investment, which boosts imports of US goods.

According to the media, while Vietnam has not yet imported LNG from the US, it is in discussions with American suppliers for future LNG power plants. The first two of these plants are expected to begin commercial power generation by June of this year.

Technology and Innovation

The Meta Group has publicly announced its intentions to engage in a long-term investment in Vietnam aimed at expanding its virtual world services, with an anticipated creation of 1,000 jobs within the high-tech sector. Furthermore, Meta seeks to collaborate with various partners to establish a comprehensive database for artificial intelligence models and big data, in addition to developing AI tools tailored to the local Vietnamese needs.

Since 2017, Meta has been collaborating with Hanoi National University to enhance digital skills training and plans to introduce an artificial intelligence program targeting students.

Education

The US Association to Advance Collegiate Schools of Business (AACSB International) has expressed interest in enhancing Vietnam’s position through human resource development and education. AACSB International aims to collaborate on improving business education and quality to align with global standards, thereby contributing to Vietnam’s competitiveness.

Tourism

Marriott International has demonstrated its support for Vietnam’s tourism sector by elevating the country to its 228th Marriott Bonvoy program member. Currently, they manage 26 hotels in Vietnam, with an additional 50 in development.

Agriculture

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Bayer, a prominent multinational corporation in the crop science sector, has made a commitment to sustainable agricultural practices in Vietnam. This would be achieved through innovations and the development of capacities for local farmers.

The company aims to launch programs that promote sustainable agriculture, thereby enhancing crop yields and protecting the environment. Furthermore, Bayer will collaborate with Vietnamese government agencies to enhance food security and promote agricultural exports.

Takeaways

Vietnam is proactively seeking to reduce its trade surplus with the US, which exceeded US$123 billion in 2024. In anticipation of US tariffs, Vietnam is implementing timely measures to establish a more equitable trade balance and to foster strategic economic partnerships with its US counterpart. These efforts are likely to enhance collaboration between businesses in both nations while demonstrating Vietnam’s goodwill toward the US government.

Nevertheless, given Vietnam’s significant involvement in global trade, businesses and investors should diligently monitor forthcoming developments to strategically prepare for potential repercussions from the anticipated US tariffs and corresponding tariffs from other nations.

To explore how tariffs affect Vietnamese exports in detail, please refer to: Impact of Tariffs by President Trump on Vietnamese Exports

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