On 7/8, new US retaliatory tariffs went into effect for most trading partners, ranging from 10% to 41%. The 20% tariff imposed on Vietnam is lower than President Donald Trump's initial announcement of 46%, but higher than the current rates for many Vietnamese exports to the US.

This tariff increase poses significant challenges. Pham Van Viet, Chairman of Viet Thang Jean Co., Ltd., stated that the textile and garment industry will face pressure from increased input costs and reduced profit margins in the short term. "The garment industry operates on seasonal production with short order cycles. Tariff changes make it difficult for businesses to renegotiate prices, especially for pre-existing contracts," he said.

However, Vietnamese exporters are not caught off guard. Since the US announced the tariffs in April, they have been developing scenarios and response strategies. Many businesses have already taken steps to diversify, preparing for the worst-case scenario.

"Initially, we prepared for a worst-case scenario with tariffs reaching 30% to 46%. The official 20% rate is a positive sign, much lower than our initial concerns," shared Nguyen Dinh Tung, General Director of Vina T&T Group.

Lach Huyen Port, Hai Phong. Photo: Le Tan

Lach Huyen Port, Hai Phong. Photo: Le Tan

Diversifying markets and products is the primary strategy for businesses. The US is currently the main export market for Vina T&T, accounting for about 46% of their total export turnover, equivalent to nearly 50 million USD in the first half of this year. To reduce reliance on this market, they have expanded exports to other countries like Japan, South Korea, and the EU. This has reduced the proportion of exports to the US from 65% last year to the current 46%.

In addition to fruit, Vina T&T is diversifying its product range by promoting processed goods like fish sauce, rice paper, and preserved fruits.

Vina T&T is not alone. A June survey conducted by the Private Economic Development Research Board (Board IV) and VnExpress, involving over 1,500 businesses, revealed that 51.6% of exporters plan to seek new markets to address tariff risks. This solution is also a priority for domestic production and business groups (nearly 35%).

Businesses in processing, manufacturing, services, agriculture, forestry, and fisheries prioritize finding markets outside the US. Among the adaptation solutions, few choose to increase selling prices or import from the US market in response to tariffs.

Since April, SK Foods, a producer of rice-based products like straws, vermicelli, noodles, and pasta, has been planning to shift its export markets to the EU, South Korea, Japan, Singapore, and the UAE. Market expansion is also Thanh Cong Textile Garment's solution to cope with global fluctuations and secure its business plan.

Vietnam participates in 17 free trade agreements (FTAs) with over 60 countries and territories, along with 70 bilateral cooperation mechanisms. According to Doctor Bui Quy Thuan from the Faculty of Economics and International Business (Phenikaa University), this is an advantage for businesses to expand exports to the EU, Japan, South Korea, and ASEAN countries, reducing dependence on the largest buyer market.

Furthermore, the US only accounts for about 13% of total global imports, meaning Vietnamese businesses have ample room to explore and diversify their export markets.

Businesses are also proactively negotiating and sharing costs with partners to retain customers. Viet Thang Jean has renegotiated with buyers to share the 3% increase in costs due to the textile and garment tariff rising from the current 15.2% to 20%.

This year, Vietnam aims for a 12% export increase, equivalent to 450 billion USD. In the first 5 months of this year, two-way trade with the US reached 77.4 billion USD, a 36.5% increase compared to the same period last year.

Vietnam exported 71.7 billion USD and imported 5.7 billion USD, with growth rates of 37.3% and 30.7% respectively. Vietnam's trade surplus with the US during this period was approximately 64.8 billion USD, ranking 4th after China, Mexico, and Iceland.

With pre-existing scenarios and preparations, a representative from Viet Thang Jean expressed confidence that the textile and garment industry "can still compete in the world's largest market."

Similarly, a Vina T&T representative expects their exports to the US to exceed 100 million USD this year. "This is the time for us to accelerate, consolidate the market, and continue to bring Vietnamese agricultural products further," he stated.

In the long term, amidst increasingly unpredictable trade competition, experts believe Vietnamese businesses need to thoroughly prepare their strategies, resources, and competitiveness to maintain their position and achieve sustainable development.

Do Thien Anh Tuan, a lecturer at the Fulbright School of Public Policy and Management, Vietnam, argues that businesses must shift from an "outsourcing" mindset, easily satisfied with low-price, low-standard product segments, to proactively enhancing value addition, investing in technology, management, and product innovation.

First, according to Tuan, businesses need a more systematic strategy for developing supporting industries, considering this a prerequisite for reducing dependence on imported components from China, South Korea, and simultaneously increasing localization rates. They must also adapt to international standards for environment, labor, and origin.

"This helps businesses avoid trade defense lawsuits and expands their access to more demanding markets like the EU or Japan," he analyzed, adding that Vietnam needs to implement a comprehensive strategy focused on upgrading the domestic capacity of the economy and businesses.

The trend of increasing production chain localization and seeking input material markets from other partners is also a long-term solution chosen by many businesses to enhance competitiveness. About 50% of Viet Thang Jean's materials are localized, and they aim to increase this to 85% in the next 3 years.

Nguyen Xuan Phu, Chairman of Sunhouse, stated that the company has invested heavily in factory systems, technology, and production capacity. They control almost the entire production process, from microchips and molds to product assembly. Sunhouse also cooperates with over 100 OEM (Original Equipment Manufacturer) partners globally, aiming for 3,000 billion VND in exports this year.

"Vietnam has the opportunity to rise in the global supply chain if it effectively utilizes its production and technology capabilities," Phu stated.

However, representatives from these businesses also pointed out current limitations such as rising production costs, while support policies for the processing industry remain weak. They suggest more incentives in taxes, land, and credit to capitalize on the global supply chain shift.

"A spinning or dyeing factory takes several years to build and complete the process. With support in capital, taxes, and procedures, the textile and garment industry can shorten its transformation journey," Viet added.

In this regard, expert Do Thien Anh Tuan also suggests that the government needs a strategy to encourage domestic businesses to expand internationally, broadening economic influence through production and investment in markets with FTAs with Vietnam, learning from the successful "Go global" models of South Korea and Thailand.

"These will be key pillars for Vietnam to effectively respond to trade competition and elevate its national standing in the long term," he added.

Thi Ha - Phuong Dung - Thuy Truong