Proactively adapting to reciprocal tariffs from the United States

Part 1: Grasping information, responding promptly

On April 2, US President Donald Trump announced the application of new reciprocal tariffs on more than 180 economies. In particular, with Vietnam, the US imposed a tax of up to 46%, creating significant impacts on bilateral trade activities, while also posing urgent requirements for businesses to restructure their market access strategies and strengthen their competitiveness.

Concerns about high reciprocal tariffs

Recently, businesses in Binh Duong that export significant volumes to the US market, particularly in sectors such as textiles, footwear, wood products, and agricultural goods, have expressed concerns about the US imposing a 46% reciprocal tariff on imports from Vietnam.

Mr. Nguyen Liem, Chairman of Binh Duong Furniture Association (BIFA), commented that the association was initially very worried about the proposed 46% reciprocal tax, as it seemed excessively high. For wood exporting companies in Binh Duong, the United States accounts for 80% of the province's export turnover in wood and wood products. Previously, the profit margin for wood exports to this market was about 5-7%, which was considered good. However, with the potential introduction of a 46% import tax, businesses are concerned that demand for wood products may decline.

Mr. Liem noted that, based on information received from the government, ministries, associations, and other stakeholders, they are monitoring the situation closely to develop effective response strategies. Given the complexity of US tax policy, he emphasized the need for the government and relevant agencies to provide timely support for businesses affected by these changes.

Mr. Dien Quang Hiep, Chairman of Minh Phat 2 Company Limited in Thuan An City, stated that over 90% of the company's exported wood products are sent to the US market. He expressed concern about the 46% import tax rate imposed by the United States, describing it as excessively high and detrimental to the competitiveness of Vietnamese wood industry. However, he noted that after an initial period of anxiety, many businesses are now calmer and in a state of waiting and hope.

Hiep emphasized the need for more detailed information regarding which industries and products will be affected by the reciprocal tax, as the 46% figure is a general estimate and may not apply uniformly to all goods. He remains optimistic that Vietnam can engage in discussions to negotiate a more acceptable reciprocal tariff rate. "We believe the Trump administration's goal is to bring all parties to the negotiating table," he stated. We believe that the Vietnamese government and businesses will implement flexible and appropriate strategies to effectively negotiate with the United States in the current circumstances”.

Ms. Truong Thuy Lien, Vice President of Binh Duong Leather and Footwear Association, said that the 46% reciprocal tax rate is too high. Enterprises in the association are waiting for official information from the Government's negotiations, along with the expectation that Vietnam and the United States would reach an agreement on the reciprocal tax rate. The association's member enterprises also exchanged official information and encouraged each other not to worry too much in order to maintain production and business.

According to Ms. Phan Le Diem Trang, Vice President of Binh Duong Textile and Garment Association, the textile and garment sector is a key export industry for Binh Duong. In recent years, the association has encouraged its member enterprises to focus on optimizing supply sources and transforming production models to comply with product origin standards. The association also supports businesses in investing in green manufacturing technologies that meet the sustainability standards required by international markets.

However, a significant challenge that many textile and garment enterprises face is their inability to develop local raw material sources, which has resulted in a dependency on foreign supplies. Additionally, the imposition of excessively high reciprocal tariffs by the U.S. on Vietnamese goods poses a major challenge for the textile and garment industry.

Negotiation efforts

Recently, during a conference with the Vietnamese Trade Office System abroad organized by the Ministry of Industry and Trade, Mr. Do Ngoc Hung, Head of Vietnamese Trade Office in the United States, discussed the U.S. policies regarding adjustments to tax rates on imported goods, which affect numerous countries, including Vietnam. He proposed that promoting bilateral cooperation through effective dialogue mechanisms, such as the Trade and Investment Framework Agreement (TIFA), could provide a foundation for addressing emerging issues in a timely and transparent manner.

Additionally, Mr. Hung identified improving the domestic business environment as a key priority. This includes simplifying import and export procedures, reducing administrative barriers, and supporting businesses in enhancing product quality to meet the increasingly stringent requirements of the international market.

He emphasized that policy advocacy and fostering high-level negotiations with major trade partners and international economic organizations are also top priorities. These efforts are not only aimed at protecting immediate interests but are also essential for building Vietnam's image as a proactive, professional, and trustworthy player on the global trade stage.

Mr. Pham Van Xo, Chairman of the Binh Duong Import-Export Association, recently reported that export enterprises in Binh Duong are under significant pressure due to the United States' announcement of its tariff policies. To maintain and strengthen this market, the association recommends that the government take more assertive actions in trade negotiations while providing support for businesses in adjusting their supply chains to comply with the new regulations of export markets. The association has also proposed the establishment of a task force dedicated to addressing tariff barriers, which would provide timely information and legal advice to businesses.

Reported by Tieu My - Translated by Ngoc Huynh