Vietnam’s Tariff Strategy: Turning U.S. Trade Pressure into Economic Opportunity

Vietnam was hit with a 46% tariff by the United States. Even if the Vietnamese dong is devalued, a significant devaluation would be unsustainable, and a minor one wouldn’t be effective—it would still trigger capital flight. Lowering tariffs on U.S. goods, on the other hand, can reduce domestic production costs and help stimulate Vietnam’s economy.

Take food as an example: many people think that reducing tariffs on U.S. agricultural products will hurt Vietnam’s domestic agriculture. But in reality, it’s beneficial. Vietnam’s main crop is rice. By reducing tariffs, imported soybeans and corn become cheaper. Cheaper soy and corn mean cheaper animal feed. With Vietnam’s low labor costs, it’s easy for households to build pens and raise livestock. Feeding pigs, cows, and sheep with this inexpensive feed can meet local meat consumption demand. Moreover, Vietnam borders China’s southern region, where beef and lamb prices are very high. If Vietnam scales up its livestock production, it can export meat to China—either legally or through smuggling—with very high profits.

At the same time, since China imposed a 34% tariff on all U.S. products, U.S. wheat, priced at about 0.85 yuan per jin, ends up costing 1.1 yuan per jin after tariffs and transport to Chinese coastal ports, while domestic wheat is around 1.2 yuan per jin. So, before the tariffs, U.S. wheat was very competitive. After tariffs, it loses its price edge and is abandoned by Chinese buyers. The U.S. is left with two choices: either lower the domestic purchase price of wheat—which angers farmers—or use re-export trade.

The U.S. has long conducted agricultural re-exports via countries like Canada, Mexico, Brazil, and Australia. During Trump’s first term, there was already news of large volumes of U.S. soybeans shipped to Brazil, which then exported them to China. If you look at Brazil’s soybean exports to China after 2018, you’d realize not all of them were grown by Brazilian farmers—many were originally from the U.S.

So if Vietnam reduces tariffs, it can re-export cheap soybeans and corn to South China. Vietnam has advantages over Brazil and Argentina in this game: its time and transport costs are much lower.

Vietnam is a tropical country, and it imports over 800,000 tons of meat annually. It has no advantage in raising livestock without affordable feed. But with cheap soy and corn, Vietnam’s livestock industry can quickly develop, eventually becoming self-sufficient in meat and even exporting the surplus.

So, cutting food import tariffs doesn’t harm Vietnam at all. On the contrary, it helps the country reduce its trade deficit with the U.S.

Another example: Vietnam has announced plans to lower tariffs on liquefied natural gas (LNG) imports from the U.S. While this may impact Vietnam’s domestic gas production, the country already relies heavily on energy imports. Oil and gas projects require massive investments, often billions of dollars, and highly skilled talent—areas in which Vietnam is lacking. Most of Vietnam’s oil and gas production is funded by foreign capital, so the main beneficiaries are foreign energy firms.

By lowering tariffs and importing LNG, Vietnam can cut domestic energy costs and re-export some of the energy to China.

Another example is reducing tariffs on American cars. Vietnam’s auto industry is underdeveloped and heavily reliant on imports from China, Japan, and South Korea. By lowering tariffs on U.S. cars, the market becomes a four-way competition. Whether the U.S. can sell more vehicles is up to them—Vietnam is merely giving them the opportunity.

Then there’s the 34% tariff China has imposed on U.S. semiconductors and components. As prices rise, U.S. firms lose competitiveness in China. Vietnam can’t produce these components, but if it lowers tariffs, many parts can be routed through Vietnam to China. This gives U.S. companies a new channel, while Vietnam profits from acting as a free trade port, similar to Hong Kong.

So, is Vietnam really losing out by lowering tariffs on U.S. goods? In most cases, no—it actually gains. Not only can it boost economic development, but it can also exchange concessions to get the U.S. to lower tariffs on Vietnamese exports.

In the long term, China might reduce investment in Vietnam to avoid U.S. tariffs. But in the short term, once the U.S. lowers tariffs, foreign companies will be less likely to leave Vietnam. This helps protect Vietnamese jobs and brings tangible benefits.

That’s why Vietnam’s Party Secretary To Lam (Su Lin) reportedly said to Trump:

“Since you dislike tariffs so much, why don’t Vietnam and the U.S. just cut all tariffs to zero together?”