Vietnam will be unaffected if the US reciprocal tax is 10%

Dr. Can Van Luc stated that the impact would be “insignificant” if the United States just imposed a 10% reciprocal tax on Vietnam’s export goods, as it does with 126 other nations.

Business response to the US countervailing duties

Dr. Can Van Luc, a member of the National Financial and Monetary Policy Advisory Council, presented three scenarios for Vietnam’s GDP growth in 2025 under the new US tariff policy at a workshop on business responses to reciprocal tariffs organized by the Vietnam Chamber of Commerce and Industry (VCCI) on April 18.

In the best-case scenario

The United States charges only a 10% reciprocal tax on Vietnamese exports, as do 126 other nations. In this scenario, exports and FDI capital are not greatly affected. GDP is predicted to continue to expand at 7.5-8%, while the average CPI is about 3.5-4%.

In the baseline situation

Mr. Luc anticipates that Vietnam will negotiate with the US to cut the tax rate to 20-25%, down from the initial 46%, starting July 9 or sooner. Following that, the operator will continue to push for a reduced tax rate. According to experts, this tax rate will lower export turnover by approximately 6-7.5 billion USD, corresponding to a rate of 1.2-1.5%. FDI capital is expected to fall by 3-5%, while GDP growth increases by 6.5-7% and CPI by 4-4.5%.

In the negative scenario

Mr. Luc stated that if Vietnam does not make significant headway in negotiations, the 46% reciprocal tax rate that will go into effect in early July will reduce exports by 22-24 billion USD, or 5.5-6%. At that point, realized FDI capital will fall by 6-8%, GDP will grow by 5.6-6%, and CPI will rise by 5%.

Main export items for the US market

According to the Vietnam Federation of Commerce and Industry (VCCI), the US market will account for more than 29% of Vietnam’s total export turnover in 2024, with key exports including electronics, textiles, footwear, wood and wood products, seafood, and machinery and equipment. Many industries, such as wood, textiles, and electrical equipment, export up to 40%, if not more, of their output to the United States.

According to VCCI Chairman Pham Tan Cong, imposing large reciprocal taxes will cause substantial damage to Vietnamese enterprises, including market share loss, diminished competitiveness, production interruption, job loss, and a negative impact on GDP development and macroeconomic stability.

Vietnam needs to implement specific strategies to better balance trade with the United States

Dr. Can Van Luc proposed that the government focus more on measures that encourage mutually beneficial cooperation with the United States, as well as increase conversation and talks through various channels. Vietnam must rapidly execute specific remedies to balance trade with the United States, such as expanding imports and continuing to lower reciprocal duties on imported goods from this country.

Mr. Luc also urged that concerns and challenges from the US side be addressed proactively and immediately. Vietnam requires a swift and successful negotiation strategy that includes specific pledges, answers, and roadmaps in order to achieve a tax rate scenario of less than 20-25%.

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