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ABC News
16-05-2025
- Business
- ABC News
Vietnam hopeful for tariff truce with US
Rachel Mealey: Fresh from clinching a temporary tariff truce with China, the Trump administration is hoping for similar, more permanent agreements in Asia. Global markets rose this week after the US and China agreed to reduce crippling tariffs on each other for 90 days, and South East Asian countries are watching closely. Among them, Vietnam, which is facing one of the highest tariff rates if its leaders don't strike a deal with Donald Trump by mid-July. Our correspondent Bill Birtles filed this report from Ho Chi Minh City. Bill Birtles: At a garment factory on the outskirts of Vietnam's biggest city, dozens of workers stitch together clothing for some of the world's biggest brands. Salaries here start at about 500 Australian dollars a month, although 23-year-old Nguyen Ngoc Anh has almost doubled her income over five years at the factory. Nguyen Ngoc Anh: I'm using the money I earn here to help pay for my younger brother to study. He's only six years old at primary school, so he has many years of schooling ahead of him. Bill Birtles: Vietnam's economy and exports were growing already when Donald Trump first came to power in early 2017. His first-term tariffs on China prompted some foreign investors and factory owners to move operations south to Vietnam, and workers like Ngo Anh picked up jobs. Now his threat to slug Vietnam with a 46 per cent tariff on everything exported to the US makes her worried. Ngo Anh: 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. Bill Birtles: South-East Asia is in the crosshairs of the American president's tariff push, with Vietnam second only to Cambodia for the size of the proposed rate. Unlike China, which can restrict rare earths and inputs that US factories need, South-East Asian countries are more vulnerable. Vietnam, for example, largely exports finished products like electronics, furniture, machinery and clothing, and its exports to the US are worth about ten times the value of what Americans sell to Vietnam. But the garment factory owner, Henry Pham Quang Anh, thinks it's just not possible for Americans to start making clothing again. Henry Pham Quang Anh: I don't think that the people in the US will try to open the factory and still win like that. You need a supply chain, a lot of things. Not easy, not easy, not only money. Bill Birtles: Vietnam's Communist Party leader, To Lam, has proposed zero tariffs all around between the two countries, an idea that would still probably mean a big trade surplus. He's dispatched negotiators to Washington, and Ho Chi Minh City-based economist, Huynh Thanh Dien, thinks a reduced rate will be the final Huynh Thanh Dien: outcome. The most likely outcome is that Vietnam will lower tariffs on American goods and products where the US has an advantage, like technology, machinery and aeroplanes, and the US might put lower tariffs on products where we have an advantage, like garments. Bill Birtles: Vietnam's state media says the country is among six nations given priority treatment by the White House for talks. So workers here are hoping for news of a deal soon. In the meantime, they're getting on with the job amid the uncertainty. This is Bill Birtles in Ho Chi Minh City, reporting for AM.
ABC News
12-05-2025
- Business
- ABC News
Amid Donald Trump's tariff uncertainty, Vietnam scrambles to avoid an economic disaster
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."
