Vietnam's factory workers are living in fear of Trump's tariffs

Straits Times

05-05-2025

HO CHI MINH CITY – For Vietnam's legion of factory workers, the mathematics of making a living was complicated enough before US President Donald Trump announced a whopping tariff on the goods they make.
Ms Nguyen Thi Tuyet Hanh worked two factory jobs, six days a week, for nearly a year after her husband lost his job in 2023. She had no other choice as she had to help feed their four children and keep them in school.
'It was brutal,' Ms Hanh, 40, said. Her husband is working full-time again at a factory, but Mr Trump's plan to put a 46 per cent tariff on imports from Vietnam hangs over their family, which lives in a row of concrete tenements on the outskirts of Ho Chi Minh City.
'My family lived through that difficult time – I don't want to live it again,' said Ms Hanh, who earns US$577 (S$747) a month as a line manager overseeing 138 workers making shoes for Nike, French sporting goods company Salomon and other global brands.
Fear is reverberating on her factory floor, alive with the hum of sewing machines stitching the fabric for shoes that are shipped to the United States.
Mr Trump paused the tariff on Vietnam, and similar levies on dozens of other countries, for 90 days. But it hardly matters here.
The destabilising prospect that the tariffs will be reinstated is already chipping away at Vietnam's economic growth, which hinges on making things for American consumers.
Vietnam's textile and garment factories have paper-thin profit margins – an average of 5 per cent, executives said.
While some of them have ramped up production to push out orders before the tariff deadline in July, others have started to cut jobs or have frozen hiring as US retailers have begun to cancel orders.
No country has grown more as a manufacturing economy over the past 15 years than Vietnam. But in that time, it has also become increasingly dependent on demand from the US, which contributed to more than one-quarter of its economy in 2024 .
'Everyone is living in great uncertainty now,' said Mr Tran Nhu Tung, chairman of Thanh Cong, a Vietnamese garment manufacturer with factories and a mill in five locations. Its 6,000 workers make clothes for Eddie Bauer, New Balance, Adidas and others.
Mr Tung's customers in the US have started asking Thanh Cong to lower its prices. 'This is a great pressure for the company because the profit margin is very low,' he said.
Mr Tran Nhu Tung, chairman of Vietnamese garment manufacturer Thanh Cong, said his US customers have started asking to lower its prices.
PHOTO: LINH PHAM/NYTIMES
Soon after the tariffs were announced, the management team at Thanh Cong began to discuss other regions where it could sell its wares, such as the Middle East and Europe. The company is also talking to its American customers to make sure they can afford hefty new import taxes.
'I don't want to lay off people,' Mr Tung said. 'We try everything to keep our people here.'
Thanh Cong has received requests from some US retail customers to increase production, and the company is trying to accommodate that.
Mr Tung is optimistic that his government can strike a deal with the Trump administration. Whatever the two countries settle on will matter for the future of his business.
Hours after Mr Trump announced reciprocal tariffs on nearly 60 countries, Vietnam's top leader, Mr To Lam, called the US President and offered to reduce tariffs on US imports to zero, urging the United States to follow.
He then sent a letter to Mr Trump, requesting a meeting in person with the President in Washington at the end of May to 'jointly come to an agreement'.
Mr Tung, who is also vice-chairman of the Vietnam Textile and Apparel Association, said the breaking point for most factories would be a final tariff that was much more than 20 per cent.
No country has grown more as a manufacturing economy over the past 15 years than Vietnam.
PHOTO: LINH PHAM/NYTIMES
Garments from Vietnam are currently taxed at nearly 28 per cent.
This includes a new tariff of 10 per cent that the Trump administration placed on all countries April 2, in addition to an existing tariff of roughly 18 per cent on all Vietnamese garments.
A final tariff of 20 per cent or more would eat deeply into the profits of both factories and their customers.
'In this scenario, the factory has to reduce its net margin, and then the big buyers from the US would have to reduce their margins and the consumers will have to pay more for their garments,' he said.
While things look bad for Vietnam, there is some hope that it will fare better than its neighbour to the north, China, which has been hit especially hard by US tariffs.
Vietnam's textile and garment factories have paper-thin profit margins – an average of 5 per cent.
PHOTO: LINH PHAM/NYTIMES
China's loss could be Vietnam's gain. But a failure to substantially lower the 46 per cent figure would be a moment of reckoning for thousands of Vietnamese companies that make things to ship to the US.
For Mian Apparel, it is the uncertainty that is most worrying. Its seven factories and two laundries, mostly in northern Vietnam, employ 12,000 workers who make swimwear, jeans and jackets for brands such as Costco, J.C. Penney, Carter's, Target, Gap and Walmart.
'Uncertainty is not good for business,' said Mr Vu Manh Hung, deputy chief operating officer of Mian Apparel.
Clients are pushing him to deliver goods faster. The factories are taking on more workers and finding other ways to produce more before the 90-day pause in tariffs ends. NYTIMES
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