Vietnam Tackles US Tariffs With Reforms And Diversification
Vietnam’s textile and garment industry, a cornerstone of its export economy, recently faced heightened challenges as the U.S. moved ahead with proposed tariff hikes that could increase duties on textile exports from the previous 15–16% to as high as 61–62%. With the U.S. accounting for 40% of Vietnam’s US$44 billion textile exports in 2024, the development threatened thin-margin manufacturers and was expected to raise prices for American consumers.
In the lead-up to the July implementation timeline, producers had rushed to ship orders, but the uncertainty resulted in canceled contracts, workforce reductions, and a sharp contraction in factory activity. In Q1 2025, exports to the U.S. rose 22% to US$31.4 billion, yet Vietnam’s manufacturing PMI dropped to 45.6 in April—marking the steepest decline in nearly two years.
To cushion the impact, Vietnam had accelerated structural reforms—diversifying export markets via FTAs like CPTPP and EVFTA, investing in strategic infrastructure such as the Hai Phong–China railway, and promoting digital transformation and green manufacturing practices.
On May 7, the U.S. and Vietnam held the first round of tariff negotiations during Washington’s temporary 90-day deferment of full tariff implementation. Vietnam was among six countries prioritized for talks. The outcome of these discussions is expected to shape the sector’s future trade trajectory and reinforce its ongoing efforts to build a more resilient and competitive textile industry.
