Maroc - TIMBERBIZ.COM.AU - A La Une - 08/Sep 00:56

Vietnam facing major challenges post US trade barriers

Rising uncertainty around US trade policies is emerging as a significant challenge for many economies, including Vietnam, prompting local businesses to adopt long-term, strategic adjustments to preserve their competitive advantage and deepen integration into global supply chains. Source: Voice of Vietnam Wood production, processing, and export is one of Vietnam’s key industries, but it is currently facing a direct impact from trade competition and tariff barriers. Nguyen Chanh Phuong, vice president of the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA), notes that in early August 2025, the United States imposed reciprocal duties of 20% on Vietnamese imports, and the figure could rise to 40% if illegal transshipment is detected. By the end of the month, the US also launched an investigation into Vietnam’s wood and furniture imports. “These moves are creating prolonged uncertainty for the wood processing industry,” Phuong says. “Although Vietnam’s wood exports grew by 8% in the first seven months of 2025, the risks remain high. The ability to control domestic raw material supply will be a decisive factor in maintaining Vietnam’s status as a sustainable source in the global market.” Similarly, the textile and garment industry is feeling the pressure. According to Pham Van Viet, vice president of the Ho Chi Minh City Association of Garments, Textiles, Embroidery and Knitting (AGTEK), Vietnam’s apparel exports to the US face an average tax rate of 35.2%, including 20% in reciprocal duties which is far higher than competitors like Bangladesh or India. In addition, up to 50% of imported fibres and materials originate from China, making them vulnerable to origin-based tariffs. “Export growth to the US has already slowed, dropping from 9-10% down to just 4-5% in July 2025 alone,” says Viet. In addition to tariff policies, the United States is also ramping up selective protectionist measures. On August 19, the US Department of Commerce announced a list of 407 derivative steel and aluminum products, subject to a 50% tariff, including several strategic items such as wind turbines, mobile cranes, and ships, adding further challenges for Vietnam’s strategic manufacturing sectors. Professor Tran Ngoc Anh, from Indiana University and founder of the Vietnam Innovation Network, points out that US trade barriers are no longer broad-based but instead target specific industries they view as unfair competitors. “This is a new strategy aimed at protecting domestic industries while sending a clear signal to trading partners,” he analyses. According to experts, US trade policy has moved beyond isolated tariff actions to become a broader geopolitical instrument with far-reaching effects across continents. For Vietnam, while export opportunities persist, they now require a significant restructuring of key industries, particularly wood processing and textiles, to stay competitive and compliant with the evolving global trade landscape. For the wood industry, HAWA Vice President Nguyen Chanh Phuong emphasises that despite the shifting policies, the US is the top market and is more stable than others. To mitigate risks, he stresses the need to expand into new export markets, diversify raw material sources, and produce more value-added products that combine wood with materials like fabric, leather, aluminium, or steel, especially in items like sofas or composite furniture. Professor Tran Ngoc Anh suggests that companies explore hybrid models by manufacturing in Vietnam and completing final assembly or packaging in the US. This approach could help balance cost advantages with compliance to political and security expectations in the US market. He also urges businesses to focus on non-strategic product categories to avoid trade conflicts and to ensure transparency and traceability, potentially using technologies like blockchain. Instead of competing solely on cost, companies should build strong Vietnamese brands with unique value propositions.