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.
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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.
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.”