Risk of Section 301 Tariffs: New Challenges for Vietnam Export Sector

Vietnam's key export industries face heightened pressures 

Vietnam among countries facing the highest proposed tariff rates

According to the WTO and Integration Division of the Legal Department at the Vietnam Chamber of Commerce and Industry (VCCI), in its classification, USTR placed Vietnam among 54 economies found to have “not enacted and not effectively enforced” bans on importing goods produced with forced labor. USTR assesses this group as having significantly larger gaps in practical enforcement compared with six economies classified as “not effectively enforcing” the ban, including Canada, Ecuador, the European Union, Indonesia, Mexico, and Pakistan, which already have bans in place or commitments under trade agreements with the United States.

Although the investigation report noted Vietnam’s submission on April 14, 2026, stating that it has issued and is implementing measures to prevent, detect, and eliminate forced labor, the U.S. side maintained that Vietnam has not yet established a direct legal import ban at this time. On this basis, Vietnam’s policies and practices were assessed as unreasonable, burdensome, or restrictive to U.S. trade, creating a legal basis for sanctions under Section 301(b) of the Trade Act of 1974.

Regarding the proposed measures, USTR proposed additional ad valorem tariffs on all products from the investigated economies, except for items excluded in Appendix A of the notice. The tariff structure is divided into two tiers: a 10% rate applied to economies that have enacted import bans, made commitments under a reciprocal trade agreement, or implemented partial control mechanisms; and a 12.5% rate applied broadly to all remaining economies, including Vietnam. The United States also plans to introduce a special mechanism for textiles and apparel, under which a certain volume of clothing and textile products may qualify for preferential Section 301 tariff treatment based on the share of raw cotton and textile fiber inputs imported back from the United States.

Proactive dialogue and supply chain tightening to reduce risks

According to the WTO and Integration Division, from a legal perspective, all of the above measures currently remain at the proposal stage within the public consultation process of the Section 301 Committee and have not yet become final, enforceable decisions. USTR has set June 22, 2026 as the deadline for registration of statements with summaries, July 6, 2026 as the deadline for written submissions, and will hold public hearings on July 7, 2026. Vietnam’s active participation in past and upcoming consultation sessions with the United States shows that it is maintaining room for dialogue to present its views and propose adjustments before the tariffs are officially issued.

From a macroeconomic perspective, the new U.S. policy moves place exporters under significant trade risk. As the United States remains Vietnam’s largest export market, a 12.5% additional tariff applied broadly would directly affect competitiveness and profit margins in key industries including textiles and apparel, footwear, furniture, electronics, and seafood. Systemic risk is further increased as the partner’s investigation report directly identifies two sensitive core supply chains, raw cotton and polysilicon inputs for solar cell production technology, in its analysis of circumvention practices. In this context, strict review of entire supply chains and implementation of traceability procedures for input materials to fully eliminate elements linked to forced labor allegations has become an urgent requirement for businesses.

From a policy perspective, the tiered tariff structure suggests a possible direction for consideration. Since the 10% level is reserved for economies that have established import bans or made commitments through reciprocal trade agreements, Vietnam’s proactive efforts to develop a legal framework banning imports of goods produced with forced labor, or to include this issue in bilateral trade negotiations, could provide a basis for seeking to move Vietnam from the 12.5% group to the 10% group.

According to the WTO and Integration Division, in the short term, the period leading up to July 6, 2026 is a critical window for government agencies, industry associations, and exporters to prepare and submit written comments, register for public hearings, and take part in efforts to expand the list of excluded goods in Appendix A for key export products, while also clarifying Vietnam’s ongoing practical measures to prevent and combat forced labor.