Amid Donald Trump's tariff uncertainty, Vietnam scrambles to avoid an economic disaster

Australia Broadcast Center

12-05-2025

In a garment factory on the outskirts of Ho Chi Minh City, there's a mixture of anxiety and quiet confidence among staff about US President Donald Trump's threat of a huge tariff.
Here, workers measure, cut, sew and pack clothing for some of the world's biggest brands, with monthly salaries starting at about $US320 ($500).
The company, named Dony, has ridden on the manufacturing wave that caused Vietnam's economy to surge in the past two decades.
Dony took off even further when Mr Trump's tariffs on China during his first term encouraged some investors to move their manufacturing to South-East Asia.
It was during the first Trump era that 23-year-old Nguyen Ngoc Anh got her job here, working her way up and almost doubling her salary along the way.
"I'm using the money I earn here to help pay for my younger brother to study. He's only six and at primary school," she told the ABC.
She intends to stay working at the company for many years to come, but Mr Trump's return to the White House has cast a cloud over the factory.
He proposed a 46 per cent tariff on all Vietnamese-manufactured goods going into the US, unless the two countries can do a deal to reduce Vietnam's huge $US123 billion trade surplus.
"A lot of our exports go to the US, so if the tariffs happen, we won't sell as much and we won't earn as much," she said.
"A lot of us here are worried."
Henry Pham Quang Anh started the Dony factory with just $US450 in his pocket. ( ABC News: Mitch Woolnough ) During the pandemic, Pham decided his business was too dependent on the US. ( ABC News: Mitch Woolnough )
Dony's boss, Henry Pham Quang Anh, isn't thrilled about the tariff threat, but he's not as worried as many of his staff.
Having started the garment factory in 2009 with just $US450 in his pocket, he's seen tremendous growth as well as setbacks over the past 16 years, including a diagnosis of tuberculosis that forced him to take time off from developing his company.
"By about 2020, we had grown to around 200 workers. But after the [COVID-19 pandemic], everything was down, down, down," he said.
As Vietnam's total exports rebounded to new records in the post-COVID years, Mr Pham started to worry that his reliance on the US market — 40 per cent of his sales — was too much.
He started pursuing alternative markets abroad for some balance, but others in Vietnam are sweating on the tariff threat much more.
"I have some friends who own companies, and some of them still export to the US about 40 to 50 per cent of their goods," he said.
"Some of them even export 100 per cent to the US, so of course they are worried."
'The Trump plan can't be successful'
Across South-East Asia, it's a familiar story.
Countries with relatively low wages courted foreign investment over the past two decades to develop their economies, following a playbook first perfected in Japan, Taiwan, Korea and later China.
Big brands — many American — built factories, supply chains and offered jobs.
Vietnam will be under a 46 per cent tariff unless it can do a deal with the US to reduce its huge $US123 billion trade surplus. ( ABC News: Mitch Woolnough ) Critics of Trump's tariff plan say US workers still cost more than three times as much as Vietnamese. ( ABC News: Mitch Woolnough ) The Vietnam government says it would be willing to cut all tariffs on incoming American goods down to zero, if the US agrees to do the same in return. ( ABC News: Mitch Woolnough )
In return, workers in Vietnam, Cambodia, Thailand and elsewhere made everything from apparel to footwear, from electronics to machinery, and even cars.
They sold them to Americans, Australians and consumers in other developed markets at prices far lower than what they would cost if produced domestically.
What seemed like a "win-win" to many in Vietnam is viewed very differently by the White House.
Mr Trump says he wants to return manufacturing jobs to the US in a bid to make imports to America more expensive, and force the consumer to buy local.
It's a goal few in Vietnam believe is achievable.
"In my opinion, the Trump plan can't be successful to bring manufacturing back to the US," said Ho Chi Minh-based economist Huynh Thanh Dien.
"Tariffs are just one factor in the bigger picture. There's also suitable infrastructure and the cost and supply of labour," he said.
Ho Chi Minh-based economist Huynh Thanh Dien says he doesn't believe Trump's tariff plan would work. ( ABC News: Mitch Woolnough )
He argues that even at the minimum federal wage, US workers still cost more than three times as much as Vietnamese workers.
Dr Huynh believes the tariff threats and the 90-day negotiating window show Mr Trump doesn't intend to follow through on such high duties, but is trying to force other countries to lower their trade barriers to US goods.
"The most likely outcome is that Vietnam would lower tariffs on American goods and products where the US has an advantage, like technology, machinery and aircraft," he said.
"And the US might put lower tariffs on products where Vietnam has an advantage, like garments."
Vietnam quietly seeks a deal
The announcement that the United States and China drastically rolled back tariffs on their goods for 90 days would have come as good news to Vietnamese officials.
Vietnam's leader, Communist Party General Secretary To Lam, has said his government would be willing to cut all tariffs on incoming American goods down to zero, if the US agrees to do the same in return.
Vietnam is trying to negotiate a trade deal with the US. ( ABC News: Mitch Woolnough )
It's an offer that would likely continue Vietnam's large trade surplus, given that its exports to the US are worth about 10 times the total value of American imports.
Like other countries in South-East Asia, Mr To has dispatched a negotiating team to Washington to try to hash out a deal.
The country's state media reports that Vietnam is one of six countries, including the UK, India, South Korea, Japan and Indonesia, that have been given higher priority for negotiations.
For now, no deals have been publicly announced, leaving workers across Vietnam and the region to get on with business while they wait for news.
"I think for higher technology industries, like building cars, [the US government] will try to keep jobs in the US," said Mr Pham, looking out across dozens of employees busily working on sewing machines under cooling fans.
"But with garments, I don't think the people in the US will try to open a factory like this."