Vietnam is facing one of its biggest trade challenges in years. New U.S. tariffs, which came into effect on August 7, are threatening to cut nearly one-fifth of Vietnam’s exports to America. The United Nations Development Programme (UNDP) estimates that the losses could reach more than $25 billion, making Vietnam the hardest-hit nation in Southeast Asia.
The U.S. is Vietnam’s largest export market. In 2023, Vietnam shipped over $136 billion worth of goods to the United States. These goods include shoes, textiles, electronics, and furniture. Much of this production comes from large multinational companies, including American and European corporations, that have set up factories in Vietnam or source heavily from local suppliers.
The sudden imposition of 20% tariffs on Vietnamese products has already shown an impact. The first set of customs data released since the measures were introduced showed that in August, exports to the U.S. dropped by 2% compared to July. Footwear, one of Vietnam’s biggest export categories, saw an even sharper decline of 5.5%. Global sportswear giants such as Nike, Adidas, and Puma, which rely on Vietnam for a significant share of their shoe production, have been directly affected, though they have not issued public comments.
Banking blackout bypassed — documents reveal Russia–Vietnam backdoor weapons payment system
Hardest-Hit in Southeast Asia
Among all countries in Southeast Asia, Vietnam is the most exposed to U.S. tariffs. According to UNDP chief economist Philip Schellekens, Vietnam could see a 19.2% fall in exports to America. This is nearly double the average 9.7% export decline predicted for other Southeast Asian countries.
Thailand, Malaysia, and Indonesia are also expected to suffer export losses, but the scale is far smaller. Thailand’s U.S. exports could drop by 12.7%, Malaysia’s by 10.4%, and Indonesia’s by 6.4%. The UNDP report highlights that no other country in Southeast Asia faces the same level of pressure as Vietnam, with only China experiencing a greater impact in absolute dollar terms.
The expected decline in exports is not only a trade issue but also an economic one. The UNDP estimates that the tariff shock could reduce Vietnam’s overall economy by about 5% of its Gross Domestic Product (GDP). This illustrates how heavily Vietnam’s growth is tied to its trade relationship with America.
Vietnam strengthens digital economy with law on cryptocurrencies and tokenised assets
Key Sectors Under Pressure
Some of Vietnam’s strongest industries are at the center of the tariff storm. Footwear is one of the clearest examples, with Vietnam ranked as the second-largest supplier of shoes in the world. The tariffs make these products more expensive for U.S. buyers, reducing demand over time.
Electronics are also significant. This sector accounts for nearly 28% of Vietnam’s total exports to the U.S., and while consumer electronics are currently exempt from the tariff hikes, risks remain. Even if these exemptions continue, the UNDP warns that Vietnam could still lose as much as $18 billion in export value to America.
Vietnam’s manufacturing supply chains add another layer of vulnerability. A large share of the country’s exports depend on parts and raw materials imported from China. If Washington decides to tighten rules on goods transshipped through Vietnam but containing high levels of Chinese input, the effect could be devastating. The UNDP noted that it did not include this scenario in its current estimates, meaning the real impact could be larger if such restrictions are enforced.
The World Bank has already revised its growth forecast for Vietnam following the tariff announcement. Officials in the country’s finance and industry ministries have not yet provided comment, but the data released so far suggests that the impact on Vietnam’s export-driven economy is beginning to take hold.