📘 From War Ruins to Global Factory
A land once devastated by American bombing now accounts for half of Nike's global shoe production. Hundreds of other American companies and their suppliers have manufacturing bases in Vietnam, too. As a Southeast Asian country's annual GDP climbed, exports to the US grew. Now, Vietnam is one of the countries most dependent on on American trade.
The United States is Vietnam's largest export market.
Vietnam's massive trade surplus with the US has made it a key target for Donald Trump.
"The problem is they charge us 90%. We're going to charge them 46% tariff."
If Vietnam were to lose access to the American market, that would have a profound effect. It would ripple across the economy, which is why this was imperative for the Vietnamese government.
President Trump says he's reached a trade deal with Vietnam following weeks of intense diplomacy between the two nations.
Unlike military conflicts, trade wars are at least fought without bloodshed. But they can still do damage. And even with a deal, the economic relationship between the US and Vietnam faces an uncertain future.
📘 Vietnam’s Export-Driven Rise
Manufacturing is the lifeblood of modern Vietnam.
It is now uh a major player in the global supply chain. It is making everything from Apple iPads to Samsung smartphones, Nike shoes.
But Nike is just one of a long list of apparel companies manufacturing in Vietnam. Lululemon, Adidas, Abberrombi, and others source huge percentages of their products here. Since the turn of the millennium, global brands have reshaped the appearance of provinces like Donai, where clusters of factories now produce and export everything from t-shirts to specialized machine parts.
Exports in general represent about 90% of um GDP.
It's absolutely critical for the growth of the economy, of lifting people out of poverty.
And after the last American troops withdrew in 1973, There was a lot of that
Postwar Vietnam was one of the world's poorest countries. It had been drained of resources after years and years of war.
Vietnam suffered significantly under collectivism in the 80s and because of the fall of the Soviet Union at the same time and bad economic policy it had to reform.
The government began to relax its control of the economy and created policies to attract foreign investors. That included tax incentives, building out the right infrastructure that these companies wanted, and generally having a very open attitude to global manufacturers looking at Vietnam.
📘 Vietnam’s Balancing Act Between Superpowers
Bolstered by the country's cheap, hardworking, relatively young, and educated labor force, as well as political stability and proximity to China, the strategy worked.
More than $600 billion of foreign investment has flowed in since 1988.
Exports have surged and as we've heard now make up about 90% of the country's GDP.
As much as 30% of those land in the US, making America's trade deficit with Vietnam its third largest by country, behind only China and Mexico. And that imbalance has only grown since the first Trump administration, in part due to policies enacted then.
During Trump 1.0, Vietnam emerged as the biggest winner of US–China tensions.
Vietnam became a place that investors gravitated towards to tap into the US market where the arbitrage between tariffs in China versus Vietnam became wider. This was part of a hedging strategy known as China plus one where companies began relocating some production to Vietnam to avoid tariffs slammed on Chinese goods.
A good example could be where the global economy continues to depend on China, Vietnam is a key alternative to that.
Jung Koi is a manager at Yangqeng wooden industries which makes and exports wood furniture to the US. He remembers the impact of Trump 1.0 well.
Trump 2.0 is very different in that instead of targeting China alone, which Vietnam benefited from, we now seeing tariffs on Vietnam itself.
Vietnam's government anticipated some sort of tariff from the Trump White House. They did not anticipate a 46% tariff. They were shocked to put a Liberation Day.
The impact of the announcement was immediate.
He says now that's down to as few as 100 containers a month because of reduced demand.
This will likely have a ripple effect on communities around manufacturing hubs.
You could see factories laying off workers. You could see plants perhaps shutting down.
Vietnam isn't alone in facing these effects. What sets it apart is the potential scale of them. It's one reason the government has responded so proactively.
They were one of the first governments to reach out to the White House and say,
"Hey, let's start talking."
The officials have repeatedly said,
"We will buy very big ticket US products such as aircraft, LNG, uh anything that will help reduce the trade gap."
The tactic appeared to work with Trump announcing the two sides had reached an agreement,
Giving full market access to American companies while slapping a 20% tariff on all Vietnamese imports.
One of the biggest sticking points in negotiations was a US demand for Vietnam to get tougher on trade fraud and do more to prevent Chinese goods being rerouted, repackaged through Vietnam to skirt higher tariffs.
And that's exceedingly difficult for Vietnam because so many of the factories here, they rely not just on components, not just on material, but they rely on machinery that comes from countries like uh China.
It's like asking Mexico to stop having a trade relationship with the United States.
While the US is the biggest market for Vietnam, China is its most important geopolitical consideration.
China sits on top of Vietnam. It has a very complicated relationship.
The last war that both countries fought was actually against each other. That is the relationship it has to be most delicate about and is the forefront of its consideration in foreign relations.
Over the years, Vietnam has been able to navigate tensions between the US and China through a strategy known as bamboo diplomacy.
Vietnam, like a bamboo, knows how to bend in the wind, so to speak.
So when the winds are shifting, it knows how to shift along with it.
They have learned how to dance between these big giants, between Washington and Beijing.
Vietnam must now repeat the feat, managing relations with two competing superpowers while preserving its export-reliant growth model.
Targeted measures are possible and that is where Vietnam can find its sweet spot in order to appease the US but at the same time maintain its key relationship with China.
Source: Bloomberg Originals. (2025, July 11). Why Vietnam had to make a trade deal with Trump [Video]. YouTube. https://www.youtube.com/watch?v=-D493o057-w