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This year, I wrote about topics related to the exchange rate in the first month. That article discussed the depreciation of the Korean won. It is necessary to consider whether the Korean won has uniquely weakened.
Concerns are growing that Vietnam will face economic pressure as President Trump's second term begins. In particular, Vietnam is the third-largest country contributing to the US trade deficit, and it is noteworthy that products from China are being used as a diversionary route to export to the United States. In this context, there are analyses suggesting that Trump is closely monitoring Vietnam.
If Chinese products enter the US through Vietnam and are subjected to high tariffs, it is anticipated that this will have a significant impact on the Vietnamese economy. In fact, the US recently applied the highest tariff rate of 46% on Vietnam as part of reciprocal tariff measures related to basic tariffs. This decision could place a considerable burden on the Vietnamese economy and may increase uncertainty regarding future trade relations.
Vietnam's high tariff rate of 46% is having a serious impact on its economy. The US is the largest market for Vietnamese exports, accounting for about 30% of total exports. Following the US are China and the EU, which account for 17% and 14% respectively, highlighting the importance of the US market.
The most exported items from Vietnam are smartphones, semiconductors, and computer parts, which correspond to an annual capacity of $10 billion and constitute 10% of total exports. South Korean companies such as Samsung Electronics and LG Electronics export products manufactured in Vietnam to the US, while Chinese companies also hold significant market share in the electronics market.
Textiles and clothing are Vietnam’s second-largest export category, with export value reaching about $8 billion, making up 8% of total exports. Clothing produced in Vietnam has recorded a market share of around 10% in the US market, and in many cases, Chinese companies are exporting these products through Vietnam as a diversion.
When the US enacted the Uyghur Forced Labor Prevention Act in 2019, many Chinese companies relocated their production facilities to Vietnam, leading to an increase in the export scale of textiles and clothing, solidifying their position as Vietnam's second major export item. Thus, the economic structure of Vietnam is greatly influenced by external factors and is undergoing continuous changes.
The difference between Korea's Samsung Electronics and Chinese companies is striking. Samsung produces products directly in Vietnam for export, while Chinese companies use Vietnam as a storage and transshipment hub rather than a production base. Many Chinese factories do not actually produce goods but serve as warehouses for products made in China. They choose to package these as Vietnamese products for export to the US, which is one reason why this has caught the attention of the Trump administration.
In the footwear sector, brands like Nike and Adidas have established production facilities in Vietnam to export products to the US. The shoe industry thus has a structure that inevitably influences US companies as well. Currently, the export scale related to footwear amounts to about $3 billion, accounting for approximately 3% of total exports.
As the high tariffs imposed on Vietnam exacerbated this issue, the Communist Party Secretary has responded to Trump’s expectations. Secretary Lam directly called Trump to request a postponement of the reciprocal tariffs set to take effect on the 9th at 46% for 1 to 3 months to arrange for negotiations. This response can be seen as part of efforts to ease tensions between the two countries.
There were no benefits given for free. Vietnam decided to reduce or eliminate tariffs on US natural gas, cars, ethanol, and other products, and also agreed to lower tariffs on agricultural products such as chicken thighs, apples, and almonds.
Additionally, the low-cost airline VietJet is set to sign a $200 million aircraft contract at the Vietnamese embassy in Washington D.C. on April 9. This is expected to have a positive impact on Vietnam's economy and trade.
President Trump expressed satisfaction with Vietnam's proactive measures and the fact that they did not respond with retaliatory tariffs. He stated via his social media, “My call with Secretary Lam was very productive. Secretary Lam said, ‘If we can reach an agreement with the US, we would like to lower the tariffs on Vietnam to zero,’” and expressed gratitude to the Vietnamese side. He also indicated his hope to meet in person soon.
The Vietnamese government announced that Secretary Lam promised President Trump to lower tariffs on US imports while suggesting the application of similar taxes on Vietnamese goods imported by the US. They agreed to continue discussions to formalize this content and to sign a tariff agreement.
Accordingly, Vietnam has become the second country to request negotiations, following Mexico. It is important to watch how the Vietnamese stock market, which plunged sharply after the tariff announcement, will respond on Monday. This could provide significant insights into future economic trends.
Unlike the negotiation style with Mexico or Vietnam, China is showing retaliatory moves. I have previously mentioned China's backlash, so I will not reiterate it. Actions like imposing retaliatory tariffs and weaponizing rare earths are deepening the conflict with the US. Such attitudes are contributing to heightened tensions in international relations.
Canada has decided to impose a 25% retaliatory tariff on US cars. This action comes as other countries, excluding China, are seeking responses, reflecting a situation where trade conflicts are intensifying.
The EU has announced plans to impose a fine of 1.4 trillion won on Elon Musk's X, showing a strong reaction. However, negotiations are also being pursued simultaneously. This situation indicates that the positions of both sides are at odds, and the results of future negotiations will be closely watched.
Currently, the reactions in international trade are becoming somewhat diverse. On one hand, Mexico and Vietnam are proactively proposing suitable proposals for negotiations, while Canada and the European Union are seeking retaliatory measures. In contrast, other countries are observing the situation and adopting a cautious attitude. In particular, the outcomes of Trump's negotiations with Vietnam are likely to significantly influence the future positions of these countries.
