Hanoi (VNA) – The US's planned imposition of heavy tariffs on Vietnamese goods presents formidable challenges for key industries while creating opportunities for enterprises to adapt and explore alternative markets, according to insiders.
With the US announcing a 10% basic import tax and reciprocal duties of up to 46% on Vietnamese goods, numerous industries including wooden furniture, textiles and garments, footwear, electronics, and seafood face severe impacts. However, many Vietnamese products are exempt from the duties, prompting businesses and industries to conduct detailed research and develop appropriate solutions.
According to Director of DMH freight forwarding joint stock company Dang Minh Hieu, the tariffs could reduce price competitiveness as increased import taxes make Vietnamese products more expensive in the US, making them less attractive compared to US domestic goods or imports from countries with preferential tariffs like Mexico and Canada. He anticipated that businesses may lose market shares if they fail to adjust their business strategies.
High tariff rates also narrow profit margins. If businesses absorb the tax increase rather than passing it on to customers, profits will decrease, especially in industries with low profit margins such as textiles and footwear. Highly-taxed items like steel, aluminum, electronics, and wooden products also create a higher level of risk for businesses. If Vietnam ships a significant volume of the products, those enterprises will put under great pressure, Hieu explained.
However, along with the negative aspects of high US tariffs, there are positive opportunities for Vietnamese businesses if they are able to capitalise on the advantages of the signed free trade agreements, promote value chain upgrades, and leverage the opportunities to replace Chinese goods exported to the US.
Specifically, if the US increases tariffs on Chinese goods, Vietnamese businesses could benefit from order shifts in industries like electronics and wood products. Exports to the US can still increase despite high tariffs. Hieu said that the duty pressure also forces forces businesses to improve quality and shift to higher-value products to offset costs.
Besides, by utilising preferential treatment from such free trade pacts as the EU – Vietnam Free Trade Agreement and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, firms could reduce dependence on the US market.
He suggested enterprises optimise costs by applying advanced technologies and automation or find cheaper raw materials within FTA blocs, such as textile materials from ASEAN. Businesses need to leverage the "Made in Vietnam" mechanism to avoid trade defence duties by proving that goods have clear origin and are not re-exported Chinese products.
Sharing the same viewpoint, Chairman of the Vietnam National Textile and Garment Group (Vinatex) Le Tien Truong held that Vietnamese businesses need to stay calm and proactive in preparing solutions in response to the tariff policy on textile exports. Vietnam will need to increase the purchase of US products to create a better position when negotiating tariffs.
Increased tariff rates could potentially reduce aggregate demand in the short term, resulting in fewer orders than expected, Truong added.
Regarding the high US tariffs, CEO of May 10 Corporation Nguyen Thi Phuong Thao recommended the Government to provide more support for textile and garment companies through tax and customs policies.
She also shared that with 60% of its total exports shipped to the US, the company began diversifying both markets and supply chains to reduce dependence on the US and China. Various cost-saving measures have been implemented while investments in technology have been made to boost productivity and competitiveness.
The corporation is also focusing on the domestic market to balance trade portfolios and keeping close tabs on material sourcing and policy developments to work out rational production and business strategies, she added./.
VNA
