Vietnamese Prime Minister Pham Minh Chinh instructed his Cabinet to prepare for a possible global trade war after U.S. President Donald Trump imposed tariffs of 10% on all Chinese products.
“Prepare for the possibility of a world trade war this year,” the prime minister said at a Cabinet meeting on Wednesday, according to the Dan Tri online newspaper.
Pham spoke after Trump announced a pause in his threatened tariffs against Mexico and Canada for 30 days.
Pham told the Cabinet that the situation in the world and the region was “developing very unpredictably, directly affecting our country, especially on exports, production and business, and the macro economy.”
He emphasized that if a global trade war were to occur, with countries imposing retaliatory tariffs on each other’s exports, it could disrupt supply chains and shrink the country’s export markets, posing significant risks to Vietnam’s economy.
Pham did not specifically mention Trump’s tariffs on products from China, a strategic trade partner and a neighboring country of Vietnam.
There are worries that Trump’s tariffs may cause rising product prices and reduced consumer purchasing power in Vietnam, a highly open economy that relies heavily on exports and foreign direct investment, with China as its leading trade partner.
Vietnamese businesses and consumers are bracing for U.S. tariffs on China to drive up the costs of some goods as the country imports machinery and electronic devices, such as computers and cellphones, from the U.S., with elements or pieces that originated from China.
The country will also likely have to cope with pressure from Beijing to import more Chinese products, analysts said.
“Vietnam may be under pressure to import more products from China as Chinese products are levied higher tariffs by the U.S.,” Nguyen Quang A, an economic political observer and businessman in Hanoi, told VOA this week.
Others predict that as American markets close to Chinese companies, they will increasingly turn to regional trading partners, like Vietnam.
In 2024, Vietnam’s exports to China totaled $61.2 billion. Meanwhile, imports from China surged to $144 billion, according to the Vietnam Chamber of Commerce and Industry.
With the United States, the situation is reversed, with Vietnam’s trade surplus in 2024 exceeding $123 billion, Reuters reported.
According to analysts, Hanoi’s pledges to import more from the U.S. as well as other offsetting measures could spare Vietnam from the Trump administration’s tariffs.
Nguyen noted a major hidden risk for Vietnam is that Chinese companies are setting up factories in Vietnam to import products for re-export, meaning they would repackage Chinese products with minimal labor by cheap Vietnamese workers and export them under the “Made in Vietnam” label to avoid tariffs.
“Chinese businesses [are] moving to Vietnam and are processing their imported materials from China and then labeling their products as ‘Made in Vietnam’ before exporting to the U.S. The U.S. will definitely examine this issue carefully,” Nguyen said.
Vietnam, which has long had geopolitical tensions with China, may face the risk of potential reprisal measures from China as Beijing said it would impose retaliatory tariffs on some U.S. goods as soon as next week.
However, Vietnam seemed to win big in Trump’s first-term trade war with China as the Southeast Asian country attracted manufacturers wanting to avoid Chinese tariffs.
If Trump’s tariffs are extended to Vietnam, the economic effects could ripple through trade balances, exchange rates, supply chains and foreign direct investment, said Vo Tri Thanh, former vice president at the Central Institute for Economic Management and a member of the National Financial and Monetary Policy Advisory Council, writing in Vietnam News.
The sweeping tariffs have triggered the phenomenon of goods being stockpiled in Vietnam and in the region to avoid tax hikes, driving up demand for container shipping and pushing freight costs to new highs.
Despite these pressures, Vietnam may find itself positioned to capitalize on global supply chain shifts, Nguyen Hong Dien, Vietnam’s minister of industry and trade, told Tuoi Tre Online, explaining that the country could attract more investment in high-value sectors.
