Ho Chi Minh City, Vietnam – Kieu Quoc Thanh, CEO of cashew export company SVC Group, expresses that the atmosphere in his sector has been “crazy” for the last two weeks.
Following United States President Donald Trump’s announcement of his recently paused “reciprocal” tariffs on April 2, Thanh has observed widespread confusion among Vietnamese exporters.
Numerous businesses dependent on the US market are checking online for tariff updates every hour, Thanh shares, while a shipping container full of cashews intended for the US market remains in limbo.
Since Trump introduced a 90-day pause on Vietnam’s 46 percent tariff along with duties affecting numerous other countries, the US has implemented a baseline 10 percent tax on imports from all nations, Vietnam included.
However, both Thanh’s US customers and customs officials are unsure about the applicable tax rates for his products, he reports.
“No one knows what’s going on,” Thanh remarked to Al Jazeera in his office last week in Ho Chi Minh City.
As businesses like Thanh’s navigate through this disruption, discussions are ongoing between Hanoi and Washington regarding a trade deal, following the initiation of negotiations on April 10.
For Vietnam, one of the globe’s most export-dependent economies, the stakes could not be higher.
The US represents Vietnam’s largest export market, with shipments to the US accounting for 30 percent of the country’s gross domestic product (GDP) last year.
While the pause on Trump’s tariffs brought some relief, the nation remains anxious about future developments, stated Tyler Manh Dung Nguyen, chief market strategist at Ho Chi Minh City Securities Corporation.
“We are experiencing a period of intense uncertainty, not just in the financial markets but also for businesses,” Nguyen expressed to Al Jazeera.
“It’s like a reality show,” Nguyen added. “Everything changes daily.”
Trump’s trade maneuvers starkly contrast with the years-long process of improving ties between Washington and Hanoi, which culminated in 2023 with the upgrade of their relationship to a “Comprehensive Strategic Partnership.”
Eddie Thai, a Vietnamese American and co-founder of the venture capital firm Ascend Vietnam Ventures based in Ho Chi Minh City, finds it disheartening to see these relations strained, especially with the 50th anniversary of the end of the Vietnam War approaching on April 30.
“I wouldn’t say it has set us back 50 years, but it’s certainly damaging a lot of goodwill that many have built since the 90s,” Thai told Al Jazeera, describing Trump’s dealings with Vietnam as destructive and personally “disappointing as an American.”
With the US and Vietnam eyeing a trade deal, China—Hanoi’s largest source of imports and second-largest export destination—remains a significant factor in the negotiations.
On Monday, Chinese President Xi Jinping commenced a five-day tour in Southeast Asia, visiting Hanoi, a move perceived as an attempt to portray China as a more dependable trading ally for the region compared to the US.
Upon his arrival, Vietnamese President Luong Cuong greeted Xi at the airport, which was followed by a 21-gun salute at Hanoi’s Presidential Palace.
In response to the warm reception given to the Chinese leader, Trump suggested that the discussions between Vietnam and China might involve plotting against the US.
“That’s a lovely meeting. Meeting like, trying to figure out, ‘How do we screw the United States of America?’” Trump told reporters at the White House.
According to Chinese state news agency Xinhua, Xi encouraged Vietnam to resist “unilateral bullying” while stating that “China’s mega market is always open to Vietnam.”
During Xi’s visit, the two countries reportedly signed 45 agreements, although specifics of the deals were not disclosed by either Chinese or Vietnamese media outlets.
Amid the escalating tariff disputes between the US and China, which have surpassed 100 percent, Vietnam has found itself acting as the “diplomatic intermediary,” according to Nguyen from Ho Chi Minh City Securities Corporation.
“[Hanoi] consistently aims to remain neutral in any situation,” Nguyen stated. “We do not align with one nation to confront another.”
US trade deficit
Trump’s tariffs have also incited discontent among foreign companies operating in Vietnam.
Given the differences between the two economies, it would be improbable for Vietnam to eliminate its trade deficit with the US—recorded as the third-highest in 2024 at $123.5bn—according to Bruno Jaspaert, general director of DEEP C Industrial Zones in Haiphong.
“Any nation like Vietnam realistically holds no leverage over the States,” Jaspaert, who also leads EuroCham Vietnam, shared with Al Jazeera.
“That flawed formula can never be balanced as it would take decades before Vietnam could acquire sufficient goods,” Jaspaert commented, addressing the controversial figures the Trump administration utilized to formulate its “reciprocal” tariff rates.
In anticipation of a potential economic downturn, Hanoi has been actively working to mend relations with the Trump administration.
The government has announced plans to purchase more Boeing aircraft and liquefied natural gas and initiated discussions regarding procuring C-130 cargo planes from Lockheed Martin.
Last month, officials reached an agreement to allow Elon Musk’s Starlink satellite internet service to conduct trials in Vietnam.
Vietnam has also made agreements with the Trump Organization.
Just before Trump’s re-election, his holding company agreed to invest $1.5bn in a golf course and hotel project in Communist Party chief To Lam’s home province of Hung Yen.
“I believe that the leadership in Hanoi has taken significant steps towards achieving a more lenient approach,” Nguyen Khac Giang, a visiting fellow at Singapore’s ISEAS-Yusof Ishak Institute, informed Al Jazeera.
To Lam was among the first foreign leaders to reach out to Trump following the tariff announcement on April 2, sending a delegation to Washington to negotiate with his administration on April 10.
To mollify Trump, he has expressed a willingness to eliminate tariffs on US goods altogether.
“There is no alternative for Vietnam but to reconcile with the US to maintain access to the US market,” Giang stated. “The Vietnamese must do everything to ensure that access remains intact.”
Despite the challenges they face, some observers also view potential benefits for Vietnam amid Trump’s trade conflict.
In the short term, businesses are preparing to boost production in order to dispatch goods to the US within the next three months while the 10 percent tariff is still applicable.
“Many are aiming to ship larger volumes – a 10 percent tariff is still manageable,” Jaspaert mentioned. “If Trump follows through on his commitment, the tariffs will increase again… I believe we’re not out of danger yet.”
In the long term, Vietnam could again benefit from heightened volatility between Washington and Beijing during Trump’s presidency.
In his first term, the Southeast Asian nation gained from a substantial relocation of factories from China, as businesses attempted to mitigate their geopolitical risks and trade obstacles.
“The real battle here is undeniably between the US and China,” Craig Martin, chairman of Dynam Capital, a private equity firm based in Ho Chi Minh City, told Al Jazeera.
“You have this uncertainty, this intensely contested trade war with alarming tariff levels [between Washington and Beijing].” “This scenario could potentially reveal a silver lining, motivating businesses to enhance operations in Vietnam,” Martin suggested.
Additionally, Vietnam has come under US scrutiny for transporting goods from China into the US, with minimal local manufacturing being done in Vietnam.
This scrutiny is likely to push Vietnam towards increasing its investment in more value-added manufacturing, noted Nguyen, the market strategist.
“I believe both governments will need to establish a mechanism to oversee this – to ensure there’s no transhipment occurring,” he stated. “This could ultimately benefit Vietnam in the mid to long run.”
Recently, Reuters reported that Hanoi is proposing measures to crack down on Chinese goods being shipped through its territory to the US, as well as tightening regulations on sensitive exports to China.
This report cited sources familiar with the matter and governmental documentation, following White House trade advisor Peter Navarro’s concerns regarding Chinese goods being mislabeled as “Made in Vietnam” to benefit from lower import tariffs.
The rising US-China tensions might present a “golden opportunity” for Europe to enhance trade with Vietnam and enable Hanoi to diversify its trade more comprehensively, Jaspaert commented.
“Vietnam has emerged victorious in all the wars it has faced, so I am confident it will also prevail in the tariff war,” Jaspaert concluded.
