The United States has decided to raise the tariff on imports from Vietnam to 20%, which is double the previous rate, leading many domestic corporations with production bases in Vietnam to expect deteriorating profitability. Some corporations are showing positive responses, noting that the tariff rate is significantly lower than the initially announced rate (46%) and that the uncertainty surrounding the tariff has been resolved.
According to Reuters on the 2nd (local time), U.S. President Donald Trump wrote on the social media platform Truth Social that he had completed trade negotiations with Vietnam's Communist Party General Secretary. He stated, "This will be a great agreement that leads cooperation between the two countries."
The United States has decided to impose a 20% tariff on all products produced in Vietnam. A 40% tariff will be levied on transshipment amounts exported to the U.S. through Vietnam by other countries to prevent China from using Vietnam as a bypass for exports.
The U.S. has previously applied a basic tariff of 10% on imports from Vietnam. President Trump announced in April that he would apply a 46% tariff on Vietnam as part of the reciprocal tariff rates for major trading partners. Although it is lower than initially announced, it is still double the existing rate.
As the tariff rate on exports to the U.S. increases, domestic corporations with production bases in Vietnam will see their profitability decline unless they can pass on the tariff increases to their selling prices. Samsung Electronics produces most of the smartphones and home appliances, including TVs, that are exported to the U.S. from its factories in Vietnam. Electronics subsidiaries such as Samsung Electro-Mechanics and Samsung Display also have factories in Vietnam. LG Electronics, LG Display, and LG Innotek, companies within the LG Group, also manufacture products in Vietnam for export to the U.S.
Kumho Tire manufactures tires supplied to complete vehicles produced in the U.S. in its factory in Vietnam. HS HYOSUNG has factories in Vietnam for its subsidiaries, including Hyosung TNC, a textile manufacturer, and Hyosung TNS, which produces automatic teller machines. The main production base for domestic small and medium-sized enterprises producing essential consumer goods like clothing and shoes, including Hansei Industry, is also in Vietnam.
Domestic corporations producing products for export to the U.S. in Vietnam generally responded that it was "a blessing in disguise." Although the tariff rate has risen compared to before, the reduction from the previously announced 46% has brought some relief.
An anonymous exporter from a major corporation stated, "If the tariff rate of 46% had been implemented, the Vietnam plant would have had to shut down," adding that "20% is lower than the rates applied to China (30%) and also lower than those for Korea, India, and other Southeast Asian countries, so the current production and export structure will not be significantly affected."
He noted, "However, the decision to impose high tariffs on transshipment volumes is a concerning aspect," adding that "As smartphones and other electronic products require components imported domestically and are assembled in Vietnam, it remains to be seen whether they will be included in the transshipment volumes."
There were also reactions welcoming the resolution of uncertainties surrounding tariffs. A representative from a major corporation remarked, "With the tariff rate on Vietnamese products significantly reduced from earlier announcements, I am hopeful that negotiations and contracts with American clients will proceed more smoothly than now."
POSCO is hoping for an increase in U.S. exports from the downstream industry. While POSCO operates factories for rebar and cold-rolled products in Vietnam, it does not export directly to the U.S. A POSCO representative stated, "With the tariff rate being lower than previously announced, an increase in Vietnam's exports to the U.S. could have a positive impact on revitalizing the downstream industry."