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How should enterprises respond to the impact of repeated tariffs

With the United States implementing tariff policies on Vietnam, some enterprises have become concerned about their investment and trade in Vietnam. In recent years, economic and trade cooperation between China and Vietnam has been continuously deepened, and the two sides have achieved remarkable results in many fields. In 2024, the bilateral trade volume between China and Vietnam reached 260.65 billion US dollars, increasing by 13.5% year-on-year.

The Year of Cultural and People-to-people Exchanges between China and Vietnam

This year marks the 75th anniversary of the establishment of diplomatic relations between China and Vietnam and the "Year of People-To-People and Cultural Exchanges between China and Vietnam". Hold more friendly activities that are down-to-earth and popular among the people, and strengthen cooperation in tourism, culture, media, health and other fields.

Future opportunities for China-Vietnam cooperation

Cross-border railway cooperation between China and Vietnam has been continuously deepened, and the feasibility study of the standard gauge railway from Lao CAI to Hanoi and Haiphong has been basically completed. The construction of smart ports is also advancing steadily. For instance, the Youyiguan - Friendship Freight Channel Smart Port project will enable 24-hour unmanned customs clearance operations. Cooperation between China and Vietnam in emerging fields such as the digital economy, green economy and clean energy has been continuously strengthened. With the construction of the China-Asean Free Trade Area Version 3.0 and the quality improvement and upgrading of the RCEP, more opportunities will come for cooperation between the two sides in these fields.

The impact brought by repeated tariffs

However, it is also worth noting that in 2024, the loss rate of FDI enterprises in Vietnam reached as high as 56%, with a cumulative loss amount of 8.85 billion US dollars. Traditional contract manufacturing industries such as textiles and electronics were significantly affected by the reduction in orders from Europe and the United States. Furthermore, from the repeated impact of the current US tariffs to the country's own manufacturing traps, the withdrawal of foreign capital and infrastructure bottlenecks and other factors, the country's future economic development will still be full of challenges.

Strategies for responding to tariff challenges

Enterprises can optimize the product structure, increase the added value of products and reduce the impact of tariffs on profits. Meanwhile, efforts should be made to enhance technological research and development as well as innovation, and improve the competitiveness of products to cope with the cost increase pressure brought about by tariffs. Actively expand other overseas markets, such as the Belt and Road Initiative, the European Union, ASEAN, etc. It provides more market opportunities for enterprises and reduces their reliance on a single market.

Although the tariff policy of the United States against Vietnam has brought challenges to some enterprises, the solid foundation of economic and trade cooperation between China and Vietnam, Vietnam's economic advantages and potential, as well as the cooperation opportunities in emerging fields between the two sides, all make going global to Vietnam still have a good prospect. However, is Vietnam worth long-term investment? In such a complex international trade environment, enterprises still need to weigh the pros and cons.

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