ASEAN Perspectives #6: Vietnam’s positive prospects after Liberation Day
On April 2nd, President Trump made good on his promise to reshape America’s global trade posture. The announcement of sweeping tariffs, including a 10% blanket duty on imports and bespoke increases on countries running trade surpluses, launched a new era of US protectionism on “Liberation Day”. Among the most affected is Vietnam, which now faces the spectre of a 46% tariff on its US-bound exports and being caught in the midst of the US’ trade dispute with its Northern neighbour, China. For Vietnam, one of the fastest-growing economies globally and an increasingly significant piece in the global supply chain puzzle, this is a pivotal moment. The near-term risks are real, albeit still uncertain, but so are the future opportunities. For investors focused on the country’s long-term fundamentals, particularly when it comes to domestic demand, they remain intact. At this juncture, it is hard to assess how the trade talks will play out by the 90-day pause. Should tariffs continue to be widespread whether at/near the 10% floor, at Liberation Day levels or anything in between, Vietnam will be one of many exporting countries impacted but on a somewhat levelled playing field. If singled out, it may become problematic longer term, but its strong internal dynamics will help it overcome trade headwinds.
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