Trade Deal Leaves Vietnam With Questions and One Big Challenge

(Bloomberg) -This is far from the settling of this week to the US-Vietnam Trade Agreement: companies that have become one of the most vivid Asian economies notice to raise the value chain.

An important element of the agreement announced by US President Donald Trump for the first time is a different tariff environment with 40% tax for those transferred from Vietnam to Vietnam. This is largely directed to China, which uses most of the companies operating in the southern neighbor to assemble their products.

Thi Thy Thuy Huong, a member of the country’s main electronic Association, said, “It will be quite difficult for Vietnam,” he said. “However, for the economy of the country – especially for the production sector, it is a motivation to increase and increase more development and localization in a real and significant way,” he said.

After many disappointments, Vietnam emerged as the most important customer with the United States as a rapid growth, export -led economy about ten years ago. In recent years, the policy makers in Washington have encouraged the country to take a larger role in the US supply chains, against the geostrategic rival China. Trump’s first trade war with Beijing saw that Chinese enterprises were in a hurry to move to the border.

Then Trump’s April 2 bomb came: 46% “mutual” tariff shocked the country of 101 million people in Vietnam. After the US President paused for three months, the Vietnamese negotiators ran to reach an agreement. While the new 20% and 40% taxes leave Vietnam exports with much higher obstacles than April, the country is now stands out to seal the third regulation that Trump has announced with any trade partner.

“Everyone is looking at Vietnam right now, Bernardo Bernardo Bautista, the Country Manager of DHL Vietnam, a logistics and shipping company. “The news changes every day, but what I can tell you is that the last three months are very eventful for us – talking to many customers,” he said.

Ho Chi Minh city -centered Bautista said that companies expect certainty about trade rules and have so far a very positive opinion.

Abundant questions. Vietnam said on Thursday that trade negotiators are still working with US colleagues to conclude the details of the contract. Treasury Secretary Scott Bessent said that his understanding was “finalized in principle”.

Vietnam timber and Forest Products Association Secretary General NGO Sy hoai said, “It is important to stay calm and expect more details,” he said. HOAI, individual trade partners, as well as mutual tariffs, as well as Trump’s sectoral ones followed and Vietnam wooden products are important to watch whether it is important to watch.

A 20% tax sits at a rate of 30% faced by China with a 10% ratio that Vietnam secured by the UK – Chinese goods continue to be affected separately from the increases in the tariffs implemented by Trump in the first period added by former President Joe Biden.

Economists and business representatives, Vietnam’s competitors how much to monitor the ratio, he said.

Duong Thi Noc Dung, Vice President of Vietnam’s Textile and Clothing Association, said that countries such as India, Thailand, Indonesia, Cambodia, Sri Lanka and Bangladesh are ultimately. “Vietnam is faced with a 20% tariff, while other countries get only 10-15%, it will apply important pressure to us and make it difficult for Vietnam products to remain competitive,” he said.

The Southeast Asian Nation has seen that sales to US markets has increased in recent years and Nike Inc. and Lululemon Athletica Inc. It has become a textile and sportswear supplier for companies such as.

Among the industries, the margins of companies will be under pressure.

New Levy, Williams-Sonoma, Inc. and Crate & Barrel Holdings Inc. Paul Yang, Vice President of Yang Cheng Wooden Industries International, who makes closed wooden furniture for, said, “It will harm our business in a way that wants us to share customers with them,” he said. Orum I’m still waiting to hear from our customers right now.

Most of the US exports to the United States consist of AirPods, telephones or other products combined with components of China and are then sent. Vietnam, both Apple Inc. As well as Samsung Electronics Co. It is an important center for and many suppliers there are Foxconn, Goertek Inc and Luxshare Precision Industry Co.

“This agreement will affect Vietnam’s production in the short term, Hu said Huong at the Vietnam Electronic Industries Association. “But in the long run, the economy will be healthier.”

Trinh Nguyen, a senior economist in Natixis, said that it was also positive that Hanoi’s determination to make an agreement with the number 1 export market.

“This means that Vietnam will continue to attract foreign direct investments because it is an attractive place to do business,” he said.

Pham Luu Hung, Chief Economist of SSI Securities, said the government will now bring the targeted support measures from tax incentives and reductions in land rental costs to high -tech assistance for high -tech assistance.

In addition to the potentially delayed application of high tariffs, Hung may limit hits with gross domestic product in 2025.

The International Monetary Fund in April predicted that in Vietnam, GDP gains exceeded 5% for the next five years. How the emergence of real growth may depend on how his companies react to the modified trade landscape.

Vietnam’s Ambassador to Singapore, Tran Phuoc Anh, recently, “Vietnam’s global capital, talent and technology race.

-With the help of Rthvika Suvarna and Malcolm Scott.

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