Vietnam Scrambles in a Tariff Bind
from Asia Unbound and Asia Program
from Asia Unbound and Asia Program

Vietnam Scrambles in a Tariff Bind

Vietnam's Communist Party General Secretary To Lam speaks during a press conference on March 10, 2025.
Vietnam's Communist Party General Secretary To Lam speaks during a press conference on March 10, 2025. Ajeng Dinar Ulfiana/Reuters

Despite Vietnam’s strategic importance and early concessions, it has become the most vulnerable target of the Trump administration’s tariffs—and now faces an uphill battle to protect its economy and reset trade ties with the United States.

April 7, 2025 9:42 am (EST)

Vietnam's Communist Party General Secretary To Lam speaks during a press conference on March 10, 2025.
Vietnam's Communist Party General Secretary To Lam speaks during a press conference on March 10, 2025. Ajeng Dinar Ulfiana/Reuters
Article
Current political and economic issues succinctly explained.

Of all the major economies hit by the Trump administration’s tariff bonanza, Vietnam may be the most exposed and least equipped to respond. Despite having one of the largest trade surpluses with the United States, Vietnam lacks the wealth of Japan, the strategic alliances of European nations, and the global influence of China. Hit with approximately 46 percent in new duties, Vietnam has limited options to protect its export-driven economy. Meanwhile, its Southeast Asian neighbors, rather than uniting like many European states, are also scrambling to appease the White House with concessions and flattery, eager to maintain access to the U.S. market.

More From Our Experts

Before the tariff barrage, some experts—including myself—believed that Vietnam might avoid severe penalties by offering modest concessions, given its strategic importance should the United States face conflict with China in the region. Vietnamese officials promoted this narrative, and even before last week’s tariffs were imposed, the country had pledged to increase purchases of U.S. goods—including American-made aircraft and agricultural products—and had already reduced tariffs on several Vietnamese exports.

More on:

Vietnam

Tariffs

Trade

Trump

It was not enough. The White House somehow concluded that Vietnam imposes 90 percent tariffs, even though the World Trade Organization estimates Vietnam’s average trade-weighted tariff at around 5 percent—a puzzling discrepancy of 85 percentage points. This came despite multiple U.S. administrations quietly encouraging American multinationals to shift production from China to countries like Vietnam to reduce dependency on Beijing. Nevertheless, Hanoi was hit with a 46 percent duty.

Given that Vietnam’s prior concessions and its outreach to Trump officials emphasizing its strategic importance failed to avert the tariffs, Hanoi was left with few options. The opaque and highly authoritarian Communist Party of Vietnam is deeply averse to showing weakness—especially under its current General Secretary, To Lam, a hardliner who rose through the security services. 

Yet To Lam took the only path truly available to him. He called Trump and had a talk that the U.S. president said was “very productive.” On Truth Social, his social media platform, Trump went further, writing, “Just had a very productive call with To Lam, General Secretary of the Communist Party of Vietnam, who told me that Vietnam wants to cut their Tariffs down to ZERO if they are able to make an agreement with the United States.”

More From Our Experts

By last Friday, Vietnamese officials were signaling that To Lam and Trump would meet soon, that Vietnam would remove all duties on U.S. imports, and that they hoped the United States would reciprocate—though Trump has made no such promise. Both countries have agreed to work toward a bilateral agreement that could reopen trade, but with the current U.S. president, a meeting does not guarantee a commitment, especially on tariffs. Vietnam may still have much more to do to escape the White House’s tariff crosshairs.

More on:

Vietnam

Tariffs

Trade

Trump

Creative Commons
Creative Commons: Some rights reserved.
Close
This work is licensed under Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) License.
View License Detail
Close

Top Stories on CFR

Trade

President Trump doubled almost all aluminum and steel import tariffs, seeking to curb China’s growing dominance in global trade. These six charts show the tariffs’ potential economic effects.

Ukraine

The Sanctioning Russia Act would impose history’s highest tariffs and tank the global economy. Congress needs a better approach, one that strengthens existing sanctions and adds new measures the current bill ignores.

China Strategy Initiative

At the Shangri-La dialogue in Singapore last week, U.S. Secretary of Defense Pete Hegseth said that the United States would be expanding its defense partnership with India. His statement was in line with U.S. policy over the last two decades, which, irrespective of the party in power, has sought to cultivate India as a serious defense partner. The U.S.-India defense partnership has come a long way. Beginning in 2001, the United States and India moved from little defense cooperation or coordination to significant gestures that would lay the foundation of the robust defense partnership that exists today—such as India offering access to its facilities after 9/11 to help the United States launch operations in Afghanistan or the 123 Agreement in 2005 that paved the way for civil nuclear cooperation between the two countries. In the United States, there is bipartisan agreement that a strong defense partnership with India is vital for its Indo-Pacific strategy and containing China. In India, too, there is broad political support for its strategic partnership with the United States given its immense wariness about its fractious border relationship with China. Consequently, the U.S.-India bilateral relationship has heavily emphasized security, with even trade tilting toward defense goods. Despite the massive changes to the relationship in the last few years, and both countries’ desire to develop ever-closer defense ties, differences between the United States and India remain. A significant part of this has to do with the differing norms that underpin the defense interests of each country. The following Council on Foreign Relations (CFR) memos by defense experts in three countries are part of a larger CFR project assessing India’s approach to the international order in different areas, and illustrate India’s positions on important defense issues—military operationalization, cooperation in space, and export controls—and how they differ with respect to the United States and its allies. Sameer Lalwani (Washington, DC) argues that the two countries differ in their thinking about deterrence, and that this is evident in three categories crucial to defense: capability, geography, and interoperability. When it comes to increasing material capabilities, for example, India prioritizes domestic economic development, including developing indigenous capabilities (i.e., its domestic defense-industrial sector). With regard to geography, for example, the United States and its Western allies think of crises, such as Ukraine, in terms of global domino effects; India, in contrast, thinks regionally, and confines itself to the effects on its neighborhood and borders (and, as the recent crisis with Pakistan shows, India continues to face threats on its border, widening the geographic divergence with the United States). And India’s commitment to strategic autonomy means the two countries remain far apart on the kind of interoperability required by modern military operations. Yet there is also reason for optimism about the relationship as those differences are largely surmountable. Dimitrios Stroikos (London) argues that India’s space policy has shifted from prioritizing socioeconomic development to pursuing both national security and prestige. While it is party to all five UN space treaties that govern outer space and converges with the United States on many issues in the civil, commercial, and military domains of space, India is careful with regard to some norms. It favors, for example, bilateral initiatives over multilateral, and the inclusion of Global South countries in institutions that it believes to be dominated by the West. Konark Bhandari (New Delhi) argues that India’s stance on export controls is evolving. It has signed three of the four major international export control regimes, but it has to consistently contend with the cost of complying, particularly as the United States is increasingly and unilaterally imposing export control measures both inside and outside of those regimes. When it comes to export controls, India prefers trade agreements with select nations, prizes its strategic autonomy (which includes relations with Russia and China through institutions such as the Shanghai Cooperation Organization and the BRICS), and prioritizes its domestic development. Furthermore, given President Donald Trump’s focus on bilateral trade, the two countries’ differences will need to be worked out if future tech cooperation is to be realized.