Vietnam has decided to slash import levies on a range of products, including liquefied natural gas and automobiles, as part of the implementation of measures related to the desire to minimize the negative effects of the tightening tariff policy of the United States.
Information about the mentioned measures is contained in a statement that was published on the official website of the government of the specified country. Hanoi has reduced tariffs on imports of certain types of cars from 64% to 32%. The tax on liquefied natural gas has been decreased from 5% to 2%. The tax on ethanol was cut from 10% to 5%.
A statement posted on the official website of the Vietnamese government also contains information about reducing tariffs on agricultural imports, including fresh apples, frozen chicken, almonds, and cherries.
Hanoi’s new trade policy measures came into force last Monday, March 31.
The mentioned Vietnam decisions, as noted by the media, are related to the fact that the President of the United States, Donald Trump, plans to announce a reciprocal tariff push on Wednesday, April 2, during an event at the White House Rose Garden.
US Trade Representative Jamieson Greer told Vietnam’s top trade official last month that the Southeast Asian country needs to improve its trade balance with the United States and further open up its markets.
Ma Tieying, senior economist at DBS Bank, wrote in a research note that a range of Asian countries will face the challenge of reciprocal tariffs. According to the expert, in this case, Vietnam and Thailand will be among the most vulnerable.
It is worth noting that the Vietnamese economic system relies heavily on exports. Last year, external shipments of products accounted for about 85% of this country’s gross domestic product (GDP). Vietnam sees the United States as its most significant customer.
The new US tariffs carry significant risks for Hanoi. Obviously, for an economy that relies heavily on exports, the deterioration of external trade conditions cannot but be a painful circumstance. The potential consequences of the United States tariff policy in the form of a downturn in global trade are a threat to Vietnam’s economic growth.
Hanoi is seeking to shore up trade ties with Washington and convince the Donald Trump administration of the seriousness of its intention to address its trade surplus, which increased to $123.5 billion last year. This is the third-highest trade gap with the United States, behind China and Mexico.
Last month, the Vietnamese finance ministry offered the cuts to the government of the country. In the relevant context, it was noted that the adjustment is in response to the complex and unpredictable development of the geopolitical and economic situation in the world, especially changes in trade and tariff policies.
The media also reported that Nike may face another blow in its attempts to revive the brand and reverse a long decline in sales amid US tariffs on imports from Vietnam.
The mentioned company’s annual report indicates that in fiscal year 2024, 50% of its footwear and 28% of its apparel were produced in the Southeast Asian country.
Also, US tariffs on goods imported from Vietnam may become a painful factor affecting Adidas. This company is in a less vulnerable position than Nike, but the negative prospects for it are also relevant. Vietnam produces 39% and 18% of Adidas’s footwear and apparel, respectively.
Currently, the US tariff rate for footwear imports from the Southeast Asian country is 13.6%. The rate for apparel is 18.8%. This is evidenced by calculations based on January trade data made by Sheng Lu, professor of fashion and apparel studies at the University of Delaware.
Morningstar analyst David Swartz stated if tariffs are extended there, then Nike’s got a problem.
It is worth noting that Nike and Adidas are not the only companies that risk losses amid the tightening of the United States trade policy in the context of goods imports from Vietnam. The Southeast Asian country has become a hub for high-tech running shoes, sportswear, and outdoor apparel. This is largely because brands are seeking to reduce their presence in China and at the same time diversify their activities within Asia amid a significant deterioration in the relationships between Washington and Beijing.
Lululemon, Columbia Sportswear, and Amer Sports, which owns Salomon and Arc’teryx, identify Vietnam as their top manufacturing country.
It is also worth noting that potential tariffs have become a threat at a time when Nike is already going through difficult times. The company has lost market share to brands that have the status of fresher and more innovative, such as On and Hoka. Last month, Nike’s chief financial officer Matt Friend said that the firm’s revenue is expected to continue to fall in the current quarter.
Some younger and smaller sportswear brands are even more focused on Vietnam. Last year, the fast-growing company On sourced 90% of its shoes and 60% of its apparel and accessories from a Southeast Asian country.
According to Circana’s Consumer Tracking Service, in the United States, running shoes sales have increased by 16% since 2021, to $7.4 billion.
It is worth noting that, in addition to Vietnam, some other Southeast Asian countries may also face the negative consequences of US tariffs and are already experiencing a difficult situation. For example, factories in Cambodia are charging 5-10% more as they receive more orders from retailers who are looking to shift production from Vietnam or China. This was stated by Michael Yee, chief executive officer at apparel and accessories sourcing company MGF Sourcing in Hong Kong.
According to media reports, citing experts, the good news for Vietnam is that tariffs on imports from this country are likely not to be as steep as for China. For Hanoi, this means a higher level of competitiveness. At the same time, the statements of experts are assumptions and do not guarantee that Vietnam will face more favorable conditions for conducting foreign trade than China.
As we have reported earlier, Vietnam Expands Chip Packaging Footprint.
