HCMC – Vietnam is under intense pressure to achieve its growth target for this year and beyond pending the outcome of trade negotiations with the U.S.
The U.S. reciprocal tariff rate on imports from Vietnam remains unclear, Nguyen Xuan Thanh, senior lecturer at the Fulbright School of Public Policy and Management, Fulbright University Vietnam, said at the Finance-Real Estate Forum 2025 held by the Saigon Times Group this morning, May 8.
The move would add pressure on policymakers to step up stimulus efforts to sustain economic growth, he emphasized.
According to Thanh, the best-case outcome would be a reciprocal tariff of 10-15%, which would allow Vietnamese exports to remain competitive and keep foreign investment flows steady. In the worst-case scenario, the rate would range from 30% to 35%, and the “China +1” strategy would not be suitable.
The target scenario assumes a tariff between 18% and 22%, which would reduce the competitiveness of Vietnamese exports to some extent but lead only to a slowdown of foreign investment, rather than an exodus, Thanh said.
“I believe neither the best- nor worst-case scenario would happen,” Thanh said. “Vietnam is responding proactively and the U.S. also wants a swift conclusion and announce the first deals early, including one with Vietnam. Influential voices at the U.S. Treasury have signaled that partners like Vietnam have met most of Washington’s key demands.”
Thanh stressed that a 20% tariff is manageable in the short run, but it would have long-term negative impacts, forcing domestic and foreign investors to reassess their strategies. Since the reciprocal tariff would be added on top of the existing rates. For example, a 20% tariff would be on top of the current 15% textile duty.
Specifically, tariff pressures would not only reduce Vietnam’s exports to the U.S. but also weigh on shipments to other markets as global economic conditions worsen. He warned that major growth pillars could be affected, including domestic consumption, which may decline as incomes and jobs tied to export manufacturing fall. Tourism could also take a hit amid slower global growth.
Trade negotiations between Vietnam and the United States have begun, Thanh said, adding that Vietnam still has room to negotiate and implement economic stimulus measures.
“The U.S. may make certain demands, and the more Vietnam meets them, the lower the tariff would be,” he noted.
The first key demand is to sharply cut import tariffs on certain products. While Vietnam has proactively reduced some tariffs, the Government has aligned these cuts to its most-favored-nation (MFN) commitments applicable to all WTO members.
The second issue involves a commitment to boost imports from America, which Vietnam is actively addressing. New developments include potential arms and LNG imports.
The third concern is that the U.S. would get tough on transshipment and origin of goods. This will require tighter inspections and stronger regulatory oversight by Vietnamese authorities. While meeting these higher standards may be challenging, especially for customs procedures, Vietnam is ready to comply.
The fourth issue concerns potential restrictions of trade with China. If raised by the U.S. side, it could complicate and prolong the negotiations.
Another sensitive area is currency policy, amid concerns over exchange rate manipulation. Thanh warned that countries accused of manipulation could face pressure not just to avoid weakening their currencies but to allow them to appreciate against the U.S. dollar. A positive signal, however, is that U.S. officials have said this is not a current negotiation objective. If such a condition were imposed, it would be difficult for Vietnam to meet.
Economic growth under pressure
International financial institutions have warned that new-generation tariff barriers are weighing heavily on the global economy. The IMF recently lowered Vietnam’s GDP growth forecast for 2025 from 6.1% to 5.2%, with potentially deeper impacts expected in 2026. On a positive note, even in such a scenario, a global recession is not expected.
“This projection is based on the worst-case tariff scenario, but a 20% rate remains a realistic possibility. At the very least, the first quarter still showed positive signs, even if it did not fully reflect the underlying situation,” Thanh said.
Some indicators point to a slowdown. Electricity production rose only 4.5% in the first quarter, compared to a 12% increase in 2024. Most retail chains and consumer goods manufacturers serving the domestic market reported either declining or flat sales during the same period.
“Although tariffs have yet to have a major impact and infrastructure investment has increased sharply, two key drivers—domestic consumption and private sector investment—remain weak,” Thanh said.
Total investment in the first quarter rose 8.3% year-on-year (not adjusted for inflation). However, private firms were still cautious about expanding production, with their investment edging up only 5.5%, compared to a 13.7% rise in public investment and 9.3% growth in foreign investment.
A major challenge is rebuilding confidence among businesses and consumers, which is closely tied to tariff risks. Unlike other ASEAN economies or China, where exports and domestic demand can offset each other, Vietnam’s economic factors move in tandem. When exports decline, job losses follow, weakening domestic consumption. If conditions improve, both exports and domestic demand would recover together.
“Focusing on the negotiations is crucial. A high tariff would dampen consumer sentiment, followed by a slowdown in private investment and possibly foreign direct investment,” Thanh said. “Many investors are currently in a wait-and-see mode when it comes to disbursement.”
Growth prospects will largely depend on the policy response, he stressed. If a tariff rate is decided and the Government still targets GDP growth of 8% or higher, stronger stimulus measures would be needed—both monetary and fiscal.
To boost demand through monetary policy, interest rates would need to be lowered. However, a weaker Vietnamese dong would make negotiations more difficult, leaving limited room for monetary easing. In contrast, there is more scope for fiscal policy maneuvering. According to Thanh, the Government’s US$35 billion public investment disbursement target for this year is achievable. If the tariff is 10%, the pressure to stimulate the economy would be less intense.
