Vietnam was one of the largest beneficiaries of the increase in U.S. tariffs assessed on Chinese exports during the Trump 1.0 administration and most expected the Southeast Asian country to see a strong jump in business when the Trump 2.0 administration was set to levy new tariffs this year. However, a (not so) funny thing happened on the way to the expected celebration – Vietnam took a significant hit in the initial tariff assessments by the U.S., and industry executives were caught looking the other way.
Still, Vietnam appears to be the country that has been losing production activity to other countries in the region, most notably, Indonesia, and the country again looks to be taking the biggest hit (outside of China) from the latest round of tariffs.
In early April, Trump dropped an additional 46 percent tariff on goods arriving in the U.S. from Vietnam. The percentage looked ridiculous until the market was told that Vietnam imposes 90 percent tariffs and taxes on U.S. goods entering the Vietnam market. That figure appears to be open to debate as the “Tariffs Charged to the U.S.A.” data, in a chart presented by the Trump administration, was based on a rather unique formula, based, in part, on each country’s trade surplus with the U.S. Some argue that the actual tariff that Vietnam imposes on U.S. goods is less than 10 percent.
The Trump administration finalized a tariff deal with Vietnam in July. The revised agreement includes the elimination of Vietnam tariffs on U.S. goods and a higher tariff on Vietnam shipments to the U.S, although it amounts to less than half of the 46 percent tariff imposed by the Trump Administration in early April.
The new deal includes:
- A 20 percent tariff on Vietnam exports to the U.S.
- U.S. access to the Vietnam import market.
- A zero percent tariff on U.S. imports into Vietnam.
- A 40 percent tariff on transshipments through Vietnam from third-party countries.
China, a top exporter to the U.S., has reportedly used Vietnam as a transshipment hub to circumvent the higher tariffs it pays on its exports to the U.S.
The World Bank has recently revised Vietnam’s growth forecasts downward for this year, following the implementation of U.S. tariffs.
According to U.S. trade data, Vietnam was the world’s sixth-largest exporter to America in 2024 with $136.5 billion worth of shipped goods. Much of that production originated from factories owned by Chinese and Taiwanese companies that relocated their operations from Chinese provinces to Vietnam, Cambodia, Indonesia, and other countries.
At issue for many in the active lifestyle market, including sporting goods, footwear, apparel, and outdoor, is the impact on goods sourced in Vietnam after many companies invested considerable time and capital in moving production from China — the clear target for tariffs for both Trump and Biden — to Vietnam, which presumably had no tariff issues.
For instance, Yue Yuen (YY), one of the largest global manufacturers of footwear for the U.S. and European markets, reportedly sourced the majority (54 percent) of its production in Indonesia in 2024, while Vietnam represented 31 percent of YY production in 2024, and China fell to 11 percent of the total. Additionally, other countries, including Bangladesh, Cambodia, and Myanmar, accounted for 4 percent of the total production. The same countries were said to be the source of raw materials to produce footwear and accessories.
For comparison, the company’s staff distribution, prior to the 2020 reporting period, was as follows: 48 percent in Vietnam, 35 percent in Indonesia, 13 percent in Mainland China, and 4 percent elsewhere.
To understand how much the production map has changed in Asia, it is important to note that China accounted for 34 percent of total YY as recently as 2013.
As recently as the company’s 2025 first-half financial report in August, YY stated that it would “proactively monitor the economic developments and remain committed to its mid- to long-term capacity allocation strategy. This includes diversifying its manufacturing capacity into regions such as Indonesia and India, where labor supply and infrastructure are supportive of sustainable growth.”
Recently published estimates by the United Nations Development Programme (UNDP) indicate that Vietnam risks losing $25 billion from U.S. tariffs, suggesting that the country is the most exposed to U.S. tariffs in Southeast Asia.
Reuters is reporting that, in a worst-case scenario of very high tariff-driven U.S. inflation, the reduced 20 percent duties levied on Vietnamese goods in August could cause its U.S. exports to fall over time by more than $25 billion, or nearly one-fifth of the yearly total. The publication attributes those estimates to Philip Schellekens, the UNDP chief economist for the Asia-Pacific region.
The reporting agency continued to say that the first comprehensive Vietnamese data released since U.S. tariffs took effect on August 7 show that Vietnam’s exports to the United States fell by 2 percent in August from July, with a 5.5 percent drop for footwear.
According to a UNDP report released last week, the potential 19.2 percent decline in Vietnamese exports to the U.S. would be nearly twice as high as the average 9.7 percent possible drop in exports from Southeast Asia.
“No country in Southeast Asia is more exposed to U.S. tariff hikes than Vietnam,” Schellekens told Reuters, noting only China would be hit harder in dollar terms.
Indonesia could fall 6.4 percent, according to the UNDP report, and Malaysia could drop 10.4 percent.
Reuters suggested that the estimated decline in U.S. exports would shave ~5 percent from Vietnam’s Gross Domestic Product, “although the tariff impact could take years to fully materialize, and was likely to be mitigated by exporters’ absorption of some costs, Vietnam’s diversification to other regions and bigger domestic spending.”
The UNDP estimates are reportedly based on the scenario where the tariffs are passed through to U.S. consumers, which clearly has not been the case so far, and the UNDP did not take into account the possible effect of 40 percent tariffs on goods transshipped through Vietnam, which Reuters reported could have a devastating impact if the Trump administration decided to set strict limits on foreign components used in exported items.
The UNDP data did not factor in current tariff exemptions on consumer electronics, which account for about 28 percent of Vietnam’s total exports to America. However, even if Washington upheld those waivers, Vietnam’s U.S. exports could still fall by $18 billion, Schellekens told Reuters.
See below for additional SGB Executive coverage of the Vietnam tariff conversation.
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EXEC: Trump Tariffs Hit Active Lifestyle Stocks Hard; Vietnam Hit a Big Surprise
