Vietnam’s Growth Amid U.S. Trade Policies

Vietnam is increasingly benefiting from former President Donald Trump’s trade policies, particularly as he considers a second presidential term. After a $1.5 billion investment from SpaceX, the Trump Organization has revealed intentions for a similar real estate venture in Hung Yen, also valued at $1.5 billion.

As noted by Forbes, Vietnam has established itself as a key player for major global brands such as Apple, Samsung, and Intel. Trump’s proposed tariffs on imports from China, Mexico, and Canada are likely to incentivize even more foreign companies to set up manufacturing in Vietnam.

On November 25, Trump declared on his Truth Social that he plans to implement a 25% tariff on goods from Mexico and Canada, alongside a 10% tariff on Chinese imports. These tariffs aim to diminish the U.S. trade deficit, reduce food prices, and stimulate job creation domestically.

Although Trump expresses a desire to bring industries back to the U.S., experts suggest that a complete return to domestic manufacturing is improbable. Instead, production is poised to move from China to other nations, with Vietnam emerging as a favorable option due to its competitive labor costs, closeness to China, and robust free trade agreements (FTAs).

Presently, Vietnam and Singapore stand as the sole Southeast Asian nations with an FTA with the European Union, further enhancing Vietnam’s market position.

During Trump’s initial term, various corporations, including Apple and Foxconn, moved parts of their operations to Vietnam. Recently, Elon Musk’s SpaceX has committed to a $1.5 billion investment. The Trump Organization’s planned luxury project in Hung Yen signals a rise in investor trust in the region.

Vietnam’s strategic location adjacent to China, along with its solid port facilities, streamlines trade and logistics. Additionally, new regulations permitting companies to source renewable energy from local solar providers make Vietnam particularly appealing to American businesses.

With a strong average annual GDP growth rate of 6.2%, Vietnam ranks among Southeast Asia’s rapid economic growth stories. This vibrant economic landscape positions the nation to leverage high-value sectors such as technology and clean energy.

The transformation of Vietnam’s manufacturing sector reflects its evolving economic goals. In the 1990s, the focus was largely on producing footwear and textiles for brands like Nike. In the last twenty years, substantial investments from tech giants like Samsung and LG have attracted a wave of smaller suppliers, establishing a lucrative manufacturing network.

Exports from Vietnam to the U.S. have significantly increased, especially in electronics, with the volume nearly doubling from 2018 to 2019. Companies such as Lego, Amazon, and Maersk are also expanding their operations within the country.

Looking ahead, sectors including high technology, logistics, and clean energy are expected to thrive. Vietnam’s ability to adapt to shifting global supply chains, combined with ongoing infrastructure advancements, enhances its attractiveness for value-added manufacturing opportunities.

With a rise in foreign direct investment (FDI) and a targeted approach towards high-value industries, Vietnam is on a promising path towards becoming a high-income nation by 2045. Trump’s policy changes favoring Vietnam as a substitute for China bolster this development further.

As SpaceX and the Trump Organization eye Vietnam, it raises curiosity about which companies might follow suit.