The Tariff Shock
Vietnam scrambles to respond
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Vietnam’s Tariff Shock
President Donald Trump finally unveiled his global reciprocal tariff plan on Wednesday and brought the hammer down on Vietnam, imposing a 46% tariff rate on Vietnamese imports.
This is on top of the universal 10% on all U.S. imports globally going into effect at midnight tonight.
While explaining the tariffs in the White House Rose Garden, Trump said: “Vietnam: great negotiators, great people, they like me. I like them. The problem is they charge us 90%. We’re going to charge them 46% tariff.”
This is the highest rate among major trading partners, though other regional countries took a beating too: the rates for Cambodia and Laos are 49% and 48%, respectively.
One glimmer of hope is that these rates won’t go into effect until April 9th, giving the Vietnamese government time to respond and come to the table.
Tuổi Trẻ reported that Deputy Prime Minister (and former Minister of Finance) Hồ Đức Phớc will visit the U.S. from April 6-14 to try and renegotiate a deal. Executives from Vietnam Airlines and VietJet will also reportedly visit New York to meet with Boeing.
It’s not clear what, exactly, Vietnam can do to please the Trump administration.
As noted previously, officials approved Starlink with startling speed, pledged to expedite approval of the planned US$1.5 billion Trump Organization resort/golf course project in Hưng Yên Province (with more similar projects in the pipeline), planned to cut tariffs on several U.S. import categories, and more.
They took a decidedly nonconfrontational approach and nonetheless got hit much harder than countries Trump routinely inveighs against. There will surely be room for negotiations, something Vietnamese officials are skilled at, as Trump pointed out, but 46% is an incredibly high starting point.
The general response here has been a mix of shock, frustration, anger - and fear for the economy if a reprieve can’t be negotiated by the 9th. The Vietnam Index plummeted over 6% in trading yesterday morning, while any level of tariffs will place huge pressure on the goal of hitting 8% GDP growth this year.
I’ll quote a couple of initial reactions from sharp Vietnam-watchers on LinkedIn.
Previous podcast guest Nguyễn Khắc Giang wrote:
“For Vietnam, this is especially tough. The claimed tariff is 90%, ‘discounted’ to 46%. It’s punitive and completely detached from how bilateral trade actually works. And while this might just be a negotiation tactic, it’s so far off the mark that there’s barely a common ground to stand on. Vice PM Ho Duc Phoc will visit the U.S. next week, but dialing this down will be hard.
Vietnam’s export-led economy stands to suffer. And the damage won’t stop at the border. This kind of heavy-handed approach could undo years of careful work rebuilding U.S.-Vietnam trust after decades of war. That trust can’t be rebuilt easily once it’s shaken.”
And Rich McClellan, the Tony Blair Institute’s country director, wrote more optimistically:
“If history is any guide, we should expect frantic behind-the-scenes diplomacy, a flood of delegation visits to Washington, and a flurry of exemptions, carve-outs, and last-minute reprieves. I’d wager that most of these tariffs won’t be anywhere close to these levels a month from now—and were never truly meant to be.
That doesn’t mean they’re harmless. The uncertainty alone can chill investment, disrupt planning, and fray trust in the international system.”
More to come, obviously.
Extra Links:
The Ripple Effects of Vietnam’s Island-Building in the South China Sea (CSIS)
Powering Ho Chi Minh City’s salt island (Mekong Eye)
Trump’s tariffs reshaped manufacturing in Asia. This time, the ramifications are even broader (Los Angeles Times)
In Huế, ‘Allusive Panorama’ Exhibition Reveals a Tender Side of Hàm Nghi Through His Art (Saigoneer)
Have a great long weekend!
Mike Tatarski
