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Repositioning FDI strategy under tariff pressure

Vietnam can no longer rely on low-cost manufacturing and assembly as a driver of growth, especially following new U.S. tariff measures. Instead, the country is being urged to reposition itself as a destination for high-tech sectors such as artificial intelligence (AI) and semiconductors. FDI holds firm, but risks remain In early April, U.S. President Donald Trump surprised global markets by announcing a new reciprocal tariff policy. The move immediately affected investor sentiment and added new uncertainty to global trade prospects. Despite the turbulence, Vietnam’s foreign direct investment (FDI) performance remained solid. In the first four months of 2025, fresh FDI pledges hit US$13.8 billion, up 40% year-on-year. Disbursed FDI capital reached over US$6.7 billion, marking a five-year high for the same period. The number of new investment projects rose by 14.1%, though total registered capital for new projects declined by 23.8%. Investors came from 60 markets, with Singapore having the largest presence, ahead of mainland China, Japan, Hong Kong, Taiwan, the British Virgin Islands, and South Korea. Finance Minister Nguyen Van Thang noted that major U.S. and European firms are still expanding in Vietnam or setting up supply chains, a sign of the country’s growing importance in global production networks. […]
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