Ho Chi Minh City eyes strategic reforms amid tariff threat

Three scenarios of tariff impact

If the United States imposes tariffs of up to 46% on Vietnamese goods, analysts from the Ho Chi Minh City Institute for Development Studies warn the impact on exports will be immediate and far-reaching. Direct shipments to the U.S. would drop sharply, while global economic headwinds could further dampen exports to other markets.

This downturn could slow the flow of foreign direct investment (FDI) into Vietnam and reduce domestic demand, particularly in sectors like tourism and manufacturing, which are closely tied to export performance. The Vietnamese dong may also face downward pressure, as increased imports from the U.S. become necessary to balance trade flows.

According to Chairman of the Ho Chi Minh City People’s Committee Nguyen Van Duoc, challenges from tariff present a "strategic opportunity" for economic restructuring. Photo: Viet Dung

In light of these risks, Dr. Truong Minh Huy Vu, Director of the Institute has laid out three potential economic scenarios for the city. The worst-case scenario assumes the full 46% tariff remains in place, resulting in the lowest growth outlook.

A more moderate scenario envisions a 25% tariff, leading to middling economic performance. The most optimistic forecast assumes the tariff is eliminated entirely, which could preserve growth momentum and open up opportunities for restructuring.

Associate Professor Dr. Pham Tien Dat, Rector of the University of Finance and Marketing, estimates the city's GDP would decline only 0.2% under the highest tariff, noting that not all sectors would be equally affected. He recommends targeted support for major exporters to the U.S., especially those with significant contributions to the city’s budget.

Meanwhile, Professor Dr. Nguyen Trong Hoai from the University of Economics Ho Chi Minh City believes the impact would be even more limited—just a 0.3% drop in GDP. If Vietnam successfully negotiates a 50% tariff reduction, the economic impact would be minimal. A full tariff removal, he adds, would benefit consumers and offer Vietnam a strategic opportunity to restructure its technological base.

Vu Kim Hanh, Chair of the Vietnamese High-Quality Goods Business Association and Director of the Business Studies and Assistance Center (BSA), called for proactive market diversification. While finding alternatives to the U.S. market will be challenging, she believes Ho Chi Minh City’s entrepreneurial spirit will prevail. In the meantime, businesses should remain calm, secure their domestic foothold, and collaborate in identifying new export markets.

A turning point for economic restructuring

According to Professor Dr. Vu Minh Khuong of the National University of Singapore (NUS), the situation presents a rare chance for Vietnam, and especially Ho Chi Minh City, to overhaul its growth model. He emphasized the importance of transparent communication to maintain investor confidence, both local and foreign.

Chairman of the Ho Chi Minh City People’s Committee, Nguyen Van Duoc, echoed this sentiment, describing the trade challenge as a "strategic opportunity" for economic restructuring. Although Vietnam’s economy is highly open, the proportion of domestically produced value in its exports remains low.

To strengthen this, Duoc urged increased localization of production and investment in support industries. He also emphasized digital transformation and the pivot to high-value sectors such as semiconductors and software design.

Despite the uncertainty, Duoc noted that many of the city’s exports are essential to the American market. The key, he said, is to remain composed, analyze the policy shifts carefully, and respond with well-designed strategies. In the short term, the city will closely monitor the government’s ongoing trade negotiations with the U.S., hoping for the lowest possible tariff rate.

Simultaneously, local departments and agencies are being instructed to continue tracking business activity, especially among large domestic and international firms, to offer timely support and solutions.

Ho Chi Minh City also plans to accelerate administrative reform—cutting 30% of bureaucratic procedures and reducing processing time by a similar margin. A renewed focus on public investment will be paired with efforts to unlock private capital.

Officials have also reaffirmed their commitment to providing financial relief through interest rate subsidies and are exploring ways to nurture emerging sectors. Priorities include training a high-quality workforce and laying the groundwork for an international financial center.