How will Trump’s tariffs hurt Vietnam GDP?

Vietnam is among the countries that ship a large proportion of their exports to the U.S. and it would therefore experience a major decrease in GDP growth due to the tariffs, Niven Winchester, a professor of economics at Auckland University of Technology in New Zealand, said.

Other victims include Canada, Mexico, Thailand, Taiwan, Switzerland, South Korea, and China, he wrote in an article on The Conversation.

Winchester’s model said Vietnam’s GDP might decline by 0.99%, or US$5 billion, under the impact of the tariffs, resulting in a $196 drop in average household income.

The calculations were made after U.S. President Trump Thursday announced a 10% tariff on imports from all countries, and up to 50% on certain countries.

The announcement, which has rocked global markets and raised concerns of recession in some countries, followed the Trump administration’s claims that some countries have taken advantage of the U.S.

It slapped a 46% tariff on Vietnam, pointing to the trade deficit of over $123 billion.

Vietnam said its average tariff on U.S. goods is only 9.4% and described the tariffs as "unfair."

Dutch financial group ING offered a grimmer outlook, saying the tariffs could decrease Vietnam’s GDP by 5.5%, making it Asia’s most affected nation ahead of Thailand.

The Vietnamese dong has recently hit a record low and exchange rate pressures are likely to persist, it said.

The high tariffs pose significant challenges to growth, especially for Vietnam and Thailand, due to their effects on exports to the U.S. and indirectly on global supply chains, it warned.

Analysts said Vietnam should negotiate promptly with the U.S. and diversify its exports.

Professor Phillip Harms of Johannes Gutenberg University Mainz (Germany) also suggested market diversification, saying its overreliance on the U.S. puts Vietnam at a disadvantage.

Speaking to VnExpress, he said: "The positive aspect is that Europe and Vietnam are not unfamiliar partners. The EVFTA is a prime example, and trade between [them] can thrive."

Last year Europe was Vietnam’s third largest export market with $52.1 billion in shipment, according to customs data.

Since the EVFTA took effect in August 2020, exports to the bloc have been growing at 12-15% annually to surpass $200 billion in 2024.

"We cannot focus solely on the U.S., despite it being a large market," Nguyen Chi Hai, an associate professor at the University of Economics and Law (Vietnam National University, Ho Chi Minh City), said.

Expanding export markets is imperative and the tariffs are an opportunity for self-renewal, he said and called for collaboration between regulators, industry trade groups and businesses to diversify exports.

With respect to responding to the U.S., experts advocate negotiations over confrontation.

"If tariffs on U.S. goods are raised, other countries will also suffer, unless the measure creates enough pressure to force the U.S. administration to reverse its decision," Harms said.

Hai suggested a "harmonized benefits and shared risks" approach: "Vietnam-U.S. bilateral relations are currently positive and quite favorable, providing a good foundation for negotiations.

"However, in negotiations, the core principle remains protecting national interests while maintaining friendliness."

The government has formed a rapid response team to counter the 46% tariff. At a press conference on April 3, Deputy Minister of Finance Nguyen Duc Chi said: "Vietnam wants balanced trade, but this must benefit all parties."

Government leaders are set to visit the U.S. this weekend to discuss the tariffs. ING predicted Southeast Asian nations would opt for talks over retaliation.

Vietnam is likely to continue negotiating with the U.S. by offering further concessions, such as reducing import tariffs on certain items like automobiles, liquefied gas and some agricultural products, it added.