Zero Tariffs – Vietnam’s Strategic Play to Rebalance Trade with the U.S.

Zero tariffs: Vietnam takes the initiative

When Vietnam’s Party General Secretary Tô Lâm held a direct phone call with U.S. President Donald Trump and offered to reduce import tariffs on American goods to zero, it wasn’t just diplomacy—it was strategy. In the face of a 46% tariff wall imposed by the U.S., this move sends a strong message: Vietnam is ready to play fair, open its market, and reset trade relations on more balanced terms. For a leader like Trump, who favors bilateral deals that benefit American exports, this is a gesture that speaks his language.

Laying the groundwork for a future U.S.–Vietnam FTA

Vietnam’s zero-tariff commitment could be the starting point for a new kind of bilateral Free Trade Agreement—something the two countries currently lack. A U.S.–Vietnam FTA could remove tariff barriers, establish firm rules on product origin (a key U.S. concern), and cement Vietnam’s role as a reliable player in the Indo-Pacific trade network. This agreement, if pursued, would also serve as a counterweight to the growing influence of China in the region.

Winners and losers: What zero tariffs mean domestically

On the consumer side, it’s a win. U.S. goods—often high-quality but expensive due to import duties—would become significantly more affordable in Vietnam. Think cheaper iPhones, Dell laptops, premium beef, or U.S. pharmaceuticals.

But for domestic industries, especially small and medium enterprises (SMEs), the pressure would intensify. Sectors like food processing, electronics, and advanced agriculture may struggle to compete. Without strong government support for innovation and quality upgrades, many local firms risk losing ground on home turf.

Vietnam’s auto industry: Crisis or transformation?

If U.S. auto imports enter tariff-free, competition will spike. Domestic manufacturers like VinFast and local assemblers will face pricing and tech pressures from American giants like Tesla and Ford. However, this could also catalyze positive change—lower costs for imported components, more foreign investment in Vietnam’s auto supply chain, and the possibility of joint R&D or tech transfers. For investors in Vietnam’s EV or auto sectors, the question is not just about risk—but about how well companies adapt.

If the U.S. removes the 46% tariff: An export and FDI boom

Should the U.S. respond by removing its 46% tariff on Vietnamese goods, the economic upside would be immediate. Export volumes—especially in affected sectors like wood, steel, and aluminum—would bounce back. Vietnam’s position as the U.S.’s largest Southeast Asian trading partner would strengthen, while global manufacturers would view Vietnam as a viable alternative to China.

Foreign direct investment (FDI) would also surge. U.S. companies seeking to diversify away from China could shift more orders and production to Vietnam, leveraging lower costs and favorable tax terms. In this scenario, Vietnam wins both export volume and long-term investor confidence.

If the U.S. keeps the tariff: Not all is lost

In the less favorable case where the U.S. maintains its 46% tariff, Vietnam still has strategic moves to play. By increasing transparency in supply chains, tightening origin verification, and inviting third-party audits, Vietnam can eliminate the main justifications for punitive tariffs. Simultaneously, it can diversify exports to markets like the EU, Korea, and the Middle East, reducing dependency on the U.S.

Moreover, Vietnam could use its own tariff policy as leverage—delaying or conditioning its zero-tariff offer to prompt reciprocity. These moves can be backed by diplomacy at forums like the WTO or ASEAN–U.S. dialogues.

Beyond trade: Building a deeper U.S.–Vietnam partnership

To truly rebalance trade, Vietnam must look beyond imports. High-value, strategic cooperation in defense, infrastructure, and tech can turn the U.S. from a trade challenge into a long-term ally.

Concrete steps include:

• Selective defense procurement of dual-use military equipment from the U.S.

• Opening infrastructure tenders to U.S. firms, especially in logistics, transport, and smart cities

• Creating U.S.-friendly industrial parks focused on tech, AI, and semiconductors

• Boosting educational and innovation ties, including U.S. university partnerships and joint R&D centers

Vietnam’s tax-zero initiative is more than a policy—it’s a statement of intent. It positions Vietnam not as a passive actor in global trade but as a proactive negotiator, ready to modernize its economy and partnerships. For investors watching Vietnam, this is a moment to pay close attention. The country is leveraging economic diplomacy to open new doors—and those who move early may find themselves ahead of the curve.