Vietnam to proactively adapt to trade policies amid global uncertainties

Competitive pressure on domestic goods

Experts outline that the complex geopolitical landscape, particularly the recent imposition of 10% tariffs on Chinese goods by the United States, poses a multitude of challenges for Vietnam.

As China is one of Vietnam's most crucial trade partners - the country’s second largest export market and the largest supplier of goods, particularly raw materials for production, experts believe any shift in Chinese economic policy will directly impact Vietnamese trade activities.

Nong Duc Lai, Vietnamese trade counselor in China, emphasises that the US tariffs will impact Chinese exports, reduce domestic investment and consumption, and lower China’s GDP growth by 0.3 - 0.4%. In addition, these measures may decrease China’s inflation rate by 0.2%.

On a positive note, according to Lai, Chinese and international businesses have been diversifying production to avoid US tariffs, leading to increased investment in countries like Vietnam. This shift has indirectly positioned Vietnam as an attractive destination due to its competitive labour costs and strategic location.

Foreign investment attraction will open up a wealth of opportunities for Vietnam to become a supporting production hub and get further involved in the supply chain, especially in the agriculture and light industries.

Furthermore, the nation will also have the chance to penetrate deeper into the Chinese market as the northern neighbour restricts imports from the US and strives to stimulate domestic consumption, Lai noted.

“The influx of foreign investment presents an opportunity for Vietnam to become a key supporting industry hub, allowing local businesses to integrate into global production and supply chains, particularly in agriculture and light industries. Vietnam also stands a chance to expand its presence in the Chinese market as China restricts imports from the US and stimulates domestic consumption,” remarks the trade official.

However, he voices his concern that as Chinese exports face restrictions in the US, Chinese enterprises may seek alternative markets, including Vietnam, intensifying competition for locally manufactured goods.

Simultaneously, Vietnamese exports will have to compete with an oversupply of Chinese products in China. Furthermore, in response to US trade policies, China is likely to devalue its currency Yuan against the US dollar to boost exports, increasing competitive pressure on Vietnamese goods.

“Besides currency devaluation, China may also use re-export trade methods, shifting assembly and production overseas to export goods to the US and other high-tariff markets. This poses risks to countries where China directs its investment, as the US government is likely to enforce strict origin-tracing policies on Chinese products," warns Lai warned.

He also cautions that as China shifts its exports to markets outside the US and EU, Chinese enterprises may lower product quality standards to meet the demands of these new markets. This aggressive pricing and competition for contracts could have a mid-term impact on Vietnamese businesses.

Accurate forecast about market trends to make flexible response

Discussing further disadvantages for the Vietnamese trade, Do Ngoc Hung, head of the Vietnam Trade Office in the US, points out that the biggest difficulty is that Vietnam is not yet considered a full market economy, leading to disadvantages in anti-dumping and anti-subsidy investigations filed by the US.

Given this reality, Hung urges the Vietnamese government to develop a clear roadmap to protect its trade interests against potential tariff measures imposed by the Trump administration. He also emphasizes the need to strengthen strategic cooperation with the US to ensure sustainable bilateral relations.

Meanwhile, Deputy Minister of Industry and Trade Phan Thi Thang underlines the urgent need to forecast market trends, adopt flexible response solutions, and improve competitiveness to adapt to global fluctuations.

“Vietnamese trade offices abroad must closely monitor, analyze, and assess trade policies in host countries,” says Thang. “They should promptly provide policy recommendations to protect Vietnam’s interests in international economic integration. Moreover, they need to conduct in-depth research on market demand, consumer preferences, and regulatory requirements to advise the Ministry of Industry and Trade on export market strategies and guide domestic production and business activities.”

She also emphasizes the importance of Trade Offices working proactively with relevant authorities in host countries to address emerging issues, such as trade disputes or fraud cases, to safeguard the legitimate rights of Vietnamese businesses.