The Trump administration’s reciprocal tariff plan takes effect today, April 2, 2025. For Vietnam, one of the countries with the largest trade surpluses with the U.S., this signals the start of an uphill battle. Faced with increased tariffs on its key exports, Vietnam must strategically tackle these challenges to stay on track with its ambitious growth targets.
Balancing Trade Through Strategic Imports and Investments
Image Source: Vietjet Air
Vietnam has taken proactive steps to address its trade imbalance with the U.S., which hit $104 billion in 2024. One key approach has been increasing imports from the U.S., with the private sector leading this effort. For instance, Vietjet made headlines by sending a delegation led by its founder, billionaire Nguyen Thi Phuong Thao, to the ‘Friends of Vietnam Summit’ at Mar-a-Lago earlier this year. This led to transactions worth $64 billion, including agreements with Boeing, GE, CFM, Pratt & Whitney, and Honeywell valued at nearly $50 billion. An additional $14 billion in deals are under negotiation, with these partnerships expected to create around 500,000 American jobs.
Meanwhile, the Vietnamese government is working to attract major U.S. investments in high-tech sectors. Companies like Nvidia, Google, and Microsoft have announced substantial projects in Vietnam, ranging from data centers to AI development and semiconductor manufacturing. In a bold move, the government has launched a pilot program allowing foreign internet service providers to operate domestically, paving the way for Elon Musk’s Starlink satellite services to launch.
Vietnam’s diversification of arms suppliers further underscores its strategic focus. The Ministry of National Defense is in discussions with the U.S. about acquiring C-130 transport aircraft and other defense equipment, building on progress made at a major defense exhibition held in Hanoi last December. Additionally, the Ministry of Finance announced reductions in tariffs on U.S. products, including liquefied natural gas (LNG) and automobiles. These efforts are part of a broader strategy to elevate Vietnam’s trade profile and strengthen ties with the U.S., countering perceptions tied to its high trade surplus.
Mitigating Tariff Impacts
Vietnam’s steel industry exemplifies resilience amidst U.S. trade measures. Despite facing a 25% tariff under Section 232 since 2018, the sector has adapted. According to SSI Research, the recent tariff hikes under the Trump administration’s second term have minimal direct impact on Vietnam’s steel exports. In fact, 2024 saw a 9.5% year-on-year rise in aluminum exports to the U.S., amounting to $479 million.
Interestingly, these new tariffs may even level the playing field for Vietnamese producers by aligning Vietnam’s import tariff rates with those of other countries before imposing additional protectionist measures. However, whether these changes suffice to ease tensions stemming from the $100 billion trade gap remains uncertain.
Navigating Geopolitical Shifts
Amid U.S.-China tensions, Vietnam’s strategic importance has grown. As Washington reduces dependence on Chinese manufacturing, Vietnam has emerged as a key destination for U.S. investments in electronics, semiconductors, and garments. Apple’s expansion to 11 facilities in Vietnam in 2023, alongside Intel’s investment surge, underscores this pivotal role in the global supply chain.
The 2023 elevation of Vietnam-U.S. relations to a comprehensive strategic partnership marked a diplomatic milestone, strengthening ties in trade, technology, and security. Vietnam’s adept balancing of relationships with China, Russia, and the U.S. further demonstrates its geopolitical finesse. By leveraging historical ties with Russia, Vietnam could serve as a conduit for U.S. engagement on global issues, such as the war in Ukraine.
Within ASEAN, Vietnam continues to enhance regional cooperation by strengthening ties with countries like Malaysia, Indonesia, and Singapore. Upgraded relationships to Comprehensive Strategic Partnerships unlock new economic opportunities, reinforcing Vietnam’s regional influence and providing stability amid global uncertainty.
Strategic Adaptation for Growth
Despite short-term trade challenges, Vietnam’s proactive economic policies are setting the stage for sustained growth. As Vietnam and the U.S. commemorate 50 years since the end of the Vietnam War and 30 years of normalized relations in 2025, their evolving partnership remains robust. Multilateral diplomacy, increased U.S. investments, and strategic imports signal a commitment to deeper cooperation. As tariffs loom, Vietnam’s ability to adapt, innovate, and strengthen bilateral ties will shape its path forward.
