US trade policy is expected to be "stricter", what should businesses do?

Many Vietnamese enterprises process goods for export, so they need to pay attention to issues related to origin. Photo: H.Diu

Opportunities to increase exports

Regarding the current opportunities and challenges of the economy for Vietnamese export enterprises, Mr. Nguyen Anh Duong, Head of the General Research Department, Central Institute for Economic Management (CIEM) said that the global economic recovery and the network of Free Trade Agreements (FTAs) have created more opportunities to increase exports, associated with the recovery of the supply chain.

In addition, there are challenges when the green transition process is still relatively slow, affecting the ability of businesses to adapt to sustainable development regulations in some major export markets. Along with that are existing risks from geopolitical conflicts (Russia - Ukraine, Middle East…), as well as the US - China trade war, the increasing trend of trade defense regulations in export markets.

But according to experts, by 2025, the trade policy of the world's number 1 economy - the United States - is expected to undergo adjustments when Donald Trump takes office as the 47th President of the United States in January 2025. For Vietnamese businesses, this is both an opportunity and a big challenge.

In the previous term, Vietnam's exports to the US grew strongly thanks to the policy of reducing dependence on Chinese goods. According to Mr. Nguyen Chanh Phuong, Vice President of the Handicraft and Wood Processing Association of Ho Chi Minh City (HAWA), many businesses have enough export orders until mid-2025, in which the US market, which contributes more than 55% of the total turnover of the wood industry, is clearly recovering. Therefore, Mr. Phuong expects that with the new US President's policy of imposing high tariffs on goods from China, Vietnam's wooden furniture exports to this market may increase.

In addition, according to experts from SSI Securities Company, the textile, seafood (pangasius), port and maritime transport industries are industries that can benefit from the shift in supply chains and the new US trade policy...

According to Dr. Haji Suleman Ali, Lecturer of the Faculty of Business, RMIT University Vietnam, many American and international businesses will look for alternatives to China, through which businesses in Vietnam can expand their operations, especially in fields such as electronics, textiles and footwear, etc.

Facing risks and unexpected policies

Experience from the 4 years of Donald Trump’s previous term as US President shows that with the “America First” policy, trade protection and prioritizing domestic production for US businesses and the economy were implemented very strongly. Tax and trade policies changed suddenly and more strictly.

Notably, in the previous term, Vietnam was put on the currency manipulation watch list. Although in the recent announcement, the US Treasury Department positively assessed Vietnam's monetary policy and continued to determine "not a currency manipulator", it was still among the 7 economies on the "monitoring list" when it exceeded 2 criteria including bilateral goods surplus and current account surplus.

In fact, bilateral trade between Vietnam and the US has been expanding significantly. The bilateral trade surplus of goods between Vietnam and the US by the end of October 2024 was US$86.45 billion. The US continues to lead the export markets in Vietnam, accounting for more than 29% of the country's total export turnover.

Dr. Haji Suleman Ali emphasized that increasing dependence on exports to the US market could expose businesses to risks related to sudden policy changes or tariff changes. Vietnamese exporters may also face retaliatory tariffs from other trading partners if global trade tensions increase.

Along with that, the US government under Donald Trump always has strict requirements on the origin of goods. Speaking at a discussion between heads of Vietnamese representative agencies abroad and businesses and associations in early November 2024, Deputy Minister of Foreign Affairs Do Hung Viet, Ambassador Extraordinary and Plenipotentiary - Permanent Representative of Vietnam to the United Nations, New York (the US) said that the domestic and foreign policies of the US government will certainly change. In particular, the US can increase trade protection measures.

Therefore, Deputy Minister Do Hung Viet suggested that businesses need to be prepared to respond when the US government may impose higher taxes, or have stronger measures to require origin. Furthermore, Vietnamese businesses are the transit and processing places for goods for export, so they need to pay more attention to issues related to origin and origin as well as have advanced solutions to increase competitiveness.

According to Mr. Nguyen Chanh Phuong, in his previous term, Donald Trump investigated many anti-dumping lawsuits against wood products from Vietnam, especially wooden furniture exported from Vietnam that were said to be "disguised" and originated from other countries such as China, then exported to the US. Therefore, when imports from Vietnam increase sharply, the US may continue to apply defense measures, so it is necessary to strictly control investment flows, especially foreign wood enterprises moving to Vietnam to produce for export to the US.

In order to respond, Mr. Nguyen Anh Duong recommends that businesses should proactively learn about new regulations in the markets and develop response plans. Management agencies should also proactively monitor and evaluate new trends and regulations to provide appropriate information to the business community; develop appropriate support policies that are not contrary to international commitments... At the same time, it needs to research solutions to adjust regulations to adapt to new trends.

Many experts also believe that the domestic business community needs to build long-term partnerships with US businesses to not only stop at the role of suppliers but also establish strategic partnerships from joint product development, market research cooperation to long-term supply to respond to market fluctuations. Moreover, as the global supply chain becomes increasingly complex, businesses need to promote the application of technology, innovation and capacity building to ensure their position in the value chain and increase the value of exported goods.