logo
Do new US tariffs tip the balance in favour of Vietnam?

Do new US tariffs tip the balance in favour of Vietnam?

Fibre2Fashion19-07-2025
Trump's reciprocal tariffs have posed new challenges for apparel manufacturers across destinations.
Several countries have already received notice of new tariff rates imposed by the United States, set to take effect August 1.
Fibre2Fashion spoke to a cross section of apparel makers in various countries to understand their take. Initially hit with a steep 46 per cent tariff on its exports, US subsequently reduced the rate to 20 per cent for most goods. Garment makers in Sri Lanka, Bangladesh believe Vietnam stands to gain, expert from Vietnam offers a different perspective.
This follows the expiration of a 90-day tariff suspension window that had previously granted temporary relief to exporters scrambling to adapt to shifting US trade policy under the Trump administration's protectionist framework that emphasises reciprocity.
Due to this policy, major apparel manufacturing countries such as Bangladesh, Cambodia, and Sri Lanka now face steep US tariff rates of 35 per cent, 36 per cent, and 35 per cent respectively on their exports. Meanwhile, another key player, India, is engaged in negotiations with the United States in hopes of securing a tariff reduction.
It may be mentioned here that as per reports, China, Vietnam, Bangladesh, Cambodia, and India held the largest share of the US apparel import market in 2024.
For India though, being a BRICS member could add a separate layer of complexity.
Trump had previously proposed an additional 10 per cent tariff on all BRICS nations, following reports that these countries were promoting the use of local currencies for cross-border trade and financial settlements, to reduce dependence on the US dollar.
Meanwhile, China —also BRICS founding member —has until August 12 to renew its deal with the US or forge a new agreement to avoid the tariffs reverting to their higher rates. This after US tariffs on Chinese goods soared as high as 145 per cent earlier this year, after which the Trump administration in May reached a deal with Beijing to scale back taxes on each other's exports for at least 90 days.
Under the truce, Chinese imports to the US are subject to a blanket duty of 30 per cent in addition to the existing 25 per cent tariffs on specific products bringing the total to 55 per cent, while US exports are subject to a 10 per cent rate.
Amidst all these, one country that seems to have gained considerable advantage vis-à-vis most of its competitors is Vietnam.
While Vietnam was initially hit with a steep 46 per cent tariff on its exports to the US, the Vietnamese Government moved quickly to engage in talks with the Trump administration and ultimately secured a more favourable deal under which the tariff rate was lowered to 20 per cent for most goods. However, a caveat was added stipulating that any products deemed to be 'transhipped' through Vietnam would be subject to a higher 40 per cent duty, a clause aimed at preventing tariff evasion via indirect routing and ensuring genuine Vietnam products benefit from the revised rates.
Garment industry remains one of the key drivers of Vietnam's economic growth and any impact on apparel exports will have repercussions.
As per Vietnam Textile and Apparel Association (VITAS), in 2024, Vietnam's textile and apparel exports reached $44 billion, marking an 11 per cent year-on-year increase.
Meanwhile, most industry players Fibre2Fashion spoke to across apparel manufacturing and export destinations, felt Vietnam has an edge over most of its competitors.
Fazlul Hoque, managing director of Bangladesh based Plummy Fashions Ltd and former president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) warned Bangladesh will struggle to compete with Vietnam in case the 35 per cent tariff remains unchanged for Bangladesh even as he added Vietnam also holds a larger share in the US market compared to Bangladesh.
John De Silva, managing director of Sri Lanka based Jia Moda Private Limited told F2F that the 35 per cent new tariff imposed by US on Sri Lanka is going to pose a massive challenge, which could result in shift of orders to countries like Vietnam thanks to the tariff advantage even as Yohan Lawrence, secretary general of Sri Lanka's Joint Apparel Association Forum (JAAFSL) underlined that Vietnam stands to gain in view of the current tariff rates.
However, N Thirukumaran, general secretary of the Tiruppur Exporters' Association (TEA), India , felt that given Vietnam's dependence on overseas yarns and fabrics in absence of adequate domestic availability, the overall advantage may not be on the expected lines, especially considering the US' stand on the issue of transhipment.
Vietnam sources approximately 70 per cent of its raw materials—such as zippers, cotton yarn, and elastic—from China, as per reports.
Meanwhile, speaking to Fibre2Fashion, Greg Fleming, industry veteran and an expert in Vietnam apparel production (operations) and supply chain noted while the country has an edge over Cambodia, the same may not be necessarily the case when compared to Bangladesh.
This stems from the fact that the countries concerned—Vietnam and Bangladesh—cater to different product categories in the US market and as such are not in direct competition so to say.
Besides, Bangladesh also scores over Vietnam in terms of labour cost, which remains cheaper and affordable than most of its competitors, explained Greg, who is based out of Ho Chi Minh City.
Like Thirukumaran, he also expressed concerns on the possible repercussions of US' transhipment clause—especially in view of focus shifting to China owned factories in the country—and how things might take shape in case Vietnamese apparel manufacturers use raw materials from countries like South Korea, with which it has a free trade agreement.
Another industry insider pointed out that there's some 'ambiguity' in the transhipment clause while adding the scale of the impact will thus depend.
So, while opinions differ on whether the current situation favours Vietnam, the tariff issue highlights a broader concern: the growing instability in supply chains and global trade as apparel exporters around the world continue to grapple with uncertainties.
Fibre2Fashion News Desk (DR)
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Chinese weaponry failed in real war, says BJP nat'l spokesperson
Chinese weaponry failed in real war, says BJP nat'l spokesperson

Time of India

timean hour ago

  • Time of India

Chinese weaponry failed in real war, says BJP nat'l spokesperson

Chennai: Operation Sindoor was conducted in Pakistan. However, on rebound, China was hit as its weaponry failed in the real war, BJP's national spokesperson Sudanshu Trivedi said here on Saturday. Citing the fall in the Chinese defence firm stocks after Operation Sindoor, he said, "The stocks of defence firms such as Avic Systems Chengdu, which manufactures the JF-17 aircraft planes and PL-15 (air-to-air missile) that were used by Pakistan, witnessed a significant fall of up to 10%. In contrast, prices of India's defence stocks, including Hindustan Aeronautics (HAL) and Garden Reach Shipbuilders, rose sharply as the weapons used in the operation were indigenously made. " Speaking at the national seminar on "Road Map to Viksit Bharat – A Multidisciplinary Approach" by Tamil Nadu Higher Education Teachers Association at VIT Chennai campus, Trivedi said the time of India has arrived. You Can Also Check: Chennai AQI | Weather in Chennai | Bank Holidays in Chennai | Public Holidays in Chennai Citing Dassault Aviation's collaboration with Tata, he said India will start defence manufacturing for European countries. "They have technology, but no manpower. A golden future is waiting," Trivedi said, adding that Vikshit Bharat will lay a vision for the next 1,000 years. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like If you have a mouse, this game will keep you up all night. No Install. Play for free. Navy Quest Undo All India Council for Technical Education (AICTE) chairman T G Sitharam said innovation in India should address global challenges. "Students should aspire to become entrepreneurs to make India a manufacturing nation. By embracing a multidisciplinary approach, we should ensure no opportunity is lost and no challenge is overlooked," he said. VIT chancellor G Viswanathan asked for more allocation of funds in the budget for education. "In this year's union budget, the allocation for education is 2.5% out of 55 lakh crore. Education development is a prerequisite for economic development. Our Gross Enrollment Ratio (GER) in higher education is only 28%, whereas developed countries have GER from 60% to 100%," Viswanathan said. VIT vice-president G V Selvam, NAAC and NBA chairman Anil Sahasrabudhe, IIT Madras director V Kamakoti, National Council for Vocational Education and Training former chairman Nirmaljeet Singh Kalsi, Akhil Bhartiya Rashtriya Shaikshik Mahasangh joint organizing secretary Guntha Laxman, and others spoke.

Global oversight needed for the tokenization of currency: Nirmala Sitharaman
Global oversight needed for the tokenization of currency: Nirmala Sitharaman

Mint

time2 hours ago

  • Mint

Global oversight needed for the tokenization of currency: Nirmala Sitharaman

Finance minister Nirmala Sitharaman on Saturday called for a redefinition of multilateral institutions to provide effective oversight as countries explore the tokenization of currency, warning of rising complexity and the lack of global frameworks to govern this shift. Speaking at the release of a book, A World in Flux: India's Economic Priorities, in New Delhi, she said that multilateral institutions have never been left in limbo in the last 100 years. The finance minister said this is true for financial as well as strategic institutions. Every multilateral institution that has successfully served earlier is now wondering where it is, what its immediate future will be, and how it will redefine itself. Her concerns about the tokenization of currency—the transformation of money into digital tokens on a blockchain or distributed ledger—come at a time when cryptocurrencies are increasingly making their way into the financial world. The Reserve Bank of India has cautioned multiple times that virtual currencies are risky. However, the US government under President Donald Trump is encouraging more innovation in this area. In January, Trump signed an executive order to ensure Washington's leadership in digital financial technology. He then set up a working group to develop a federal regulatory framework governing digital assets, including stablecoins, and to evaluate the creation of a strategic national digital assets stockpile. Trump also revoked the Treasury Department's 'Framework for International Engagement on Digital Assets, which suppressed innovation and undermined US economic liberty and global leadership in digital finance'. The US is also trying to become the 'crypto capital of the planet', according to the presidential order. Sitharaman said multilateral institutions have to be redefined. 'If you could go for a currency with no gold backing sometime in the 70s, now it is already moving towards tokenization and is that something on which we see the depth of?' The minister also asked if there was any framework under which any country could unilaterally take that route. 'Who is going to have oversight on these sorts of things?' The minister said the depth and the complexity of the situation were increasing. The book, A World in Flux: India's Economic Priorities, edited by Amita Batra, former chairperson at the Centre for South Asian Studies and A.K. Bhattacharya, editorial director at Business Standard is published by Rupa Publications India Pvt. Ltd. Sitharaman also said in response to a question about the normalization of economic ties with China that it was right to point out that there are calls for greater access and interaction with China, and possibly to open some windows. 'That is not just from our side, even the Chinese have been approaching through the ministry of external affairs,' the minister said, referring to external affairs minister S. Jaishankar's recent visit to China. 'There is some kind of beginning. As to how far it will go, it is something we will have to wait and see,' the minister said, adding it might help the economy, and a sense of caution would have to be built in. To a question on investments in the economy, she said that companies' and banks' balance sheets have become healthier, and the corporate tax rate was cut to boost investments. Referring to what the minister was hearing from observers and her own interactions with business leaders, Sitharaman asked if businesses were sitting on passive, investible funds. 'That is, investible funds that are being engaged passively rather than investing and expanding capacity. That is an issue that I would obviously want the industry to speak about.' On trade, she said bilateral trade has now taken priority over multilateral trade, though she could not comment on the merits of this trend. The minister added that negotiations for trade deals are well progressing with the US and the EU.

While US meddled in Greenland, Russia quietly moved in on this strategic Arctic territory belonging to Norway
While US meddled in Greenland, Russia quietly moved in on this strategic Arctic territory belonging to Norway

Time of India

time2 hours ago

  • Time of India

While US meddled in Greenland, Russia quietly moved in on this strategic Arctic territory belonging to Norway

As US ambitions in Greenland made global headlines, another Arctic flashpoint quietly began to heat up, this time in Norway's backyard, as per a report. While American diplomatic efforts focused on Greenland's strategic value, especially under the Trump administration, Russia was busy stepping up its presence and influence in the Svalbard Archipelago , a remote cluster of icy islands under Norwegian control, as per a report by Caliber. Why Is Svalbard Gaining Strategic Importance? Experts now warn that Moscow may be using Washington's Arctic moves as cover to press its own claims in Svalbard, due to Svalbard's location, which offers even more strategic leverage than Greenland, as per the report. Explore courses from Top Institutes in Please select course: Select a Course Category Project Management Others Leadership Technology Data Science Public Policy Cybersecurity healthcare MCA others CXO Data Analytics Degree PGDM Artificial Intelligence MBA Data Science Design Thinking Healthcare Digital Marketing Finance Product Management Operations Management Management Skills you'll gain: Portfolio Management Project Planning & Risk Analysis Strategic Project/Portfolio Selection Adaptive & Agile Project Management Duration: 6 Months IIT Delhi Certificate Programme in Project Management Starts on May 30, 2024 Get Details Skills you'll gain: Project Planning & Governance Agile Software Development Practices Project Management Tools & Software Techniques Scrum Framework Duration: 12 Weeks Indian School of Business Certificate Programme in IT Project Management Starts on Jun 20, 2024 Get Details Located roughly midway between mainland Norway and the North Pole, Svalbard has long been on the periphery of global attention, as per Caliber. But that changed as melting Arctic ice opened up new opportunities for shipping routes and natural resource extraction, and shifted global attention to the far north, according to the report. ALSO READ: Bitcoin to $300,000? Traders warn of massive surge before next Great Depression hits Russia's Real Focus: Military Leverage Over the GIUK Gap Russia has increasingly accused Norway of monopolising the surrounding continental shelf, but analysts argue the real value of Svalbard isn't economic, it's strategic, as per Caliber. Its location provides a key vantage point over the Greenland-Iceland-UK (GIUK) Gap, a narrow maritime corridor that Russian submarines would need to cross during a conflict, as per the report. NATO's control over Svalbard, especially Bear Island at the southern end, could give the alliance a critical military advantage, as per the Caliber report. Live Events Russia's Fears Over NATO Military Use of Svalbard Moscow's fear is that Norway, with backing from the US and NATO allies, could eventually militarize the archipelago, transforming Svalbard into a launchpad for surveillance missions or even strike aircraft operations that could threaten Russia's nearby missile testing facilities in Novaya Zemlya, according to the Caliber report. While overt military activity remains unlikely for now, especially given Russia's ongoing military strain in Ukraine, but political and psychological pressure is expected to grow, and reportedly Moscow will continue to test the limits of NATO's response, as reported by Caliber. ALSO READ: 8 video games Twitch turned into global hits: Dune Awakening, GTA 5, Fortnite, Among Us, Phasmophobia and more Signs of Russia's Growing Presence In Svalbard Incidents in recent years have raised the speculations, as per the report: Chechen special forces were spotted using Svalbard's main airfield during Arctic drills. A Russian trawler allegedly severed undersea communication cables in 2022. Soviet flags have reappeared in Russian settlements like Barentsburg and Pyramiden. In 2023, Russia's consul general held a symbolic Victory Day parade on Norwegian soil. Another significant move is that Russia planned to build a research center on the archipelago and extend invitations to BRICS member states, as reported by caliber. This move could mark the beginning of a broader diplomatic and geopolitical effort to entrench Russian influence under the guise of scientific cooperation, as reported by Caliber. FAQs Why does Svalbard matter to Russia and NATO? Its location gives a major advantage in watching and controlling key naval routes between the Atlantic and Arctic. Could this lead to war in the Arctic? That's unlikely right now, but the political pressure and strategic posturing are definitely heating up.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store