Vietnam Negotiations: What’s the Winning Hand?
Call it capitulation—or savvy business?
Vietnam quickly got past the shock of the 46 percent tariffs announced by President Trump last Wednesday with a zero tariff (both ways) alternative.
A call was set up on Friday—indicating early-mover and decisive action from the Vietnamese government. President Trump noted on Truth Social Friday: “Just had a very productive call with To Lam, General Secretary of the Communist Party of Vietnam, who told me that Vietnam wants to cut their Tariffs down to ZERO if they are able to make an agreement with the U.S. I thanked him on behalf of our Country, and said I look forward to a meeting in the near future.”
Both the government and the industry have been moving fast in Vietnam, thinking through possible solutions, brainstorming, and working with the industry as well as policy makers. The shock has still to settle, but they’re moving with the speed of an industry that has become accustomed to growth.
Watch on FN
Apparel manufacturers told Sourcing Journal that they were “beyond shocked.” Several manufacturers who asked not be named, said that the impact of such a heavy duty would decapitate exports as margins in the apparel and textile sector were already slim. “While duties on China were expected to be high, we had not anticipated anything more than 10 percent at a maximum for Vietnam,” a manufacturer in Ho Chi Minh city said.
Vietnam became the second largest apparel exporter in the world in 2024, overtaking Bangladesh. Approximately 38 percent of those expoers were to the U.S. with an increase of 12.3 percent over the previous year according to the Vietnam Textile and Apparel Association (VITAS).
Overall, imports from Vietnam to the U.S stood at $136.6 billion in 2024, up about 19 percent from 2023, according to the Office of the U.S. Trade Representative.
Vietnam is also an important footwear manufacturer. In 2024, approximately half of Nike footwear, and 28 percent of its apparel was made in Vietnam. Thirty-nine percent of Adidas’ footwear is also manufactured there.
Analysts are hurrying to find solutions. While President Trump has said that these were based on the trade deficit with the U.S in each country, some analysts are noting that the high duty for Vietnam could be a retaliatory measure against China as a large number of Chinese companies have moved production to Vietnam.
Other analysts have commented that the proactive efforts being made by the Vietnamese government could result in a reduction of the tariffs levied, and were likely “an exercise to bring more global players to the negotiating table.”
“The 46 percent duty is a significant and unexpected blow to the sector,” Truong Van Cam, vice chairman, VITAS observed. “Our manufacturers already operate with slim margins in a highly competitive environment. A tariff this steep—far higher than those imposed on competitors—will push many businesses to the brink.”
He said that VITAS has also called on the government to work with the U.S. to revise the tariff—potentially adjusting it by product category.
A few manufacturers told Sourcing Journal that they were already in conversations with global brands to find ways to handle the situation which is set to go into effect from Wednesday.
“Time is running out,” one of them said, “but we are hopeful that the government will be able to get an agreement with the U.S. for delaying enforcement of the duty by a few months while we can work out negotiations and find the best way forward.”
In a survey carried out by the American Chamber of Commerce in Vietnam in February more than 81 percent of U.S. businesses operating in Vietnam said they were “apprehensive about the potential disruptions and reduction in trade volume” that would be caused by tariffs. The numbers concerned with supply chain interruption and diminished competitiveness in the manufacturing sector rose to 92 percent.
The Vietnamese government has been reaching out to the U.S., but also to industry leaders. Deputy prime minister Ho Duc Phoc met with representatives of textiles companies on Friday, taking in suggestions and concerns and possible outcomes. He left for the U.S. on Sunday where he is expecting to find a way to continue the conversation and seek alternative solutions.
Meanwhile, the government continues to underline the need to maintain strong economic ties; a task force to provide quick responses on this issue was set up by prime minister Pham Minh Chinh on Thursday, who said in his understated fashion: “the tariff is not in line with the good relationship between the two countries.”
