Recently, the US has announced new import tariffs on goods from many countries, of which Vietnam is subject to the highest reciprocal tariff. This poses a big challenge for export enterprises, especially in key industries such as textiles, footwear and wood products. In this situation, what strategies do Vietnamese export enterprises need to adapt and maintain development in a volatile market?
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US imposes new tax rate of up to 46% on Vietnamese goods
On April 2, US President Donald Trump officially announced new import tariffs on many countries, including Vietnam, which is subject to a tax of up to 46%. According to information from the White House, this list reflects the tariffs that countries are imposing on the US, however, the administration did not announce the specific calculation method.
Specifically, the tax table announced by the US shows that Vietnam, China and the European Union are respectively imposing 90%, 67% and 39% tax on the US. In addition, Mr. Trump also announced that from April 5, all goods imported into the US will be subject to a common tax of 10%. In particular, major trading partners will be subject to higher tax rates, effective from April 9, according to the reciprocal tax rates in the new list.
The US imposition of a 46% tax on Vietnam is creating significant pressure on many key export industries. According to a report from VIS Rating, sectors such as electronics, machinery and equipment, textiles, footwear and wooden furniture will be most heavily affected. These are industries with a high percentage of revenue dependent on the US market, making businesses face many risks from the new tax policy.
However, the impact will not be uniform across industries. Multinational corporations manufacturing electronics and machinery in Vietnam can flexibly adjust by shifting production to other countries to reduce the impact of tariffs. In contrast, domestic enterprises in the textile, footwear and wood products industries will face more difficulties due to lack of alternatives and high dependence on exports.
Statistics from VIS Rating show that some businesses have a very high export rate to the US, typically: Song Hong Garment Company (MSH) has 80% of its revenue from the US market, TNG (TNG) 46%, Vietnam Textile and Garment Group (VGT) 35%, Savimex (SAV) 50%,… With such a high level of dependence, the US’s imposition of high taxes will cause these businesses to face serious challenges.
Difficulties for B2B businesses exporting to the US and Europe
The decision to impose high tariffs on Vietnamese goods has created many major challenges for B2B businesses exporting to the US and European markets.
Direct impact of tax rates on prices and orders
First, the most obvious impact is that product prices have increased significantly, causing businesses to lose their competitive advantage. Previously, Vietnamese goods were highly valued for their low prices, good quality, and suitability to the needs of US importers. However, with the current high tax rate, businesses are forced to increase selling prices or accept a reduction in profits, putting great pressure on business operations.
In addition, many US importers tend to seek sources of supply from countries with lower tax rates such as Mexico, India, and Bangladesh, causing orders from this market to decline severely. The loss of one of the world’s largest export markets will create a chain reaction, causing many Vietnamese businesses to fall into financial difficulties, even facing the risk of having to reduce production or withdraw from the US market.
Fierce competition from international rivals
In addition to price challenges, Vietnamese businesses also face fierce competition from international rivals. China, despite also being subject to high tariffs in recent times, still has advantages thanks to its large-scale production system, complete supply chain and ability to quickly adapt to US trade policies. Meanwhile, Mexico and some countries with free trade agreements with the US enjoy tax incentives, making their goods much more competitive than those of Vietnam.
In addition, Southeast Asian countries such as Thailand and Indonesia are also actively investing in improving their export capacity, taking advantage of opportunities from changing markets. In this context, if Vietnamese enterprises do not quickly adjust their strategies, they will likely be eliminated from the race for market share in the US.
Supply Chain Barriers and Finding B2B Partners
The continued rise in international shipping costs, especially after the pandemic, has created an additional burden for exporting businesses. The US and EU are also increasingly tightening regulations on origin, requiring businesses to prove that production materials do not originate from countries subject to high tariffs such as China. This makes it difficult for many Vietnamese businesses to meet inspection standards and legal documents when exporting to the US.
Furthermore, many Vietnamese B2B businesses still do not have a clear strategy for approaching the US market in a professional manner, leading to passivity in finding partners and expanding distribution channels. In the context of the US market increasingly tightening import policies, the lack of careful preparation will make it increasingly difficult for Vietnamese businesses to penetrate this potential market.
What solutions for Vietnamese B2B export businesses?
Although the US imposing high tariffs on Vietnam is a big challenge, there are still some strategic steps that can help Vietnamese B2B export businesses overcome difficulties and maintain sustainable development in the international market.
Shifting export markets and diversifying markets
A proactive solution for B2B exporting businesses is to diversify export markets to reduce dependence. Taking advantage of free trade agreements (FTAs) helps expand opportunities in Europe, Canada, Australia, Japan and South Korea, where tax rates are preferential and demand for Vietnamese goods is high. At the same time, businesses can exploit new markets such as the Middle East, Eastern Europe and Africa, which have great consumption potential but require careful research on standards, tastes and distribution channels.
Transforming production and sales models
Enterprises can shift from CMT (Cut, Make, Trim) production to FOB (Free on Board), which means proactively controlling raw materials and finishing products, in order to share the tax burden with customers. This not only helps reduce the impact of taxes on product prices but also helps increase commercial value, enhancing the competitiveness of Vietnamese products in the international market.
Strengthening trade defense capacity
As trade barriers continue to increase, it is important to proactively respond to trade defense measures. Businesses need to closely monitor international trade regulations and trends to be able to adjust their export strategies in a timely manner. In addition, studying measures to protect business interests such as anti-dumping lawsuits or resistance to protectionist policies from partners will help businesses maintain stability and development.
Catch the market signal
Another important solution is to proactively produce and export according to market signals, ensuring product quality meets the standards of international markets. The Ministry of Industry and Trade recommends that businesses need to be flexible in meeting market requirements, especially demanding markets such as the US and EU. This will help businesses not only meet tax requirements but also maintain market share and grow in the context of a rapidly changing trade environment.
> See more: Marketing strategy perspective for Vietnamese enterprises in the US market after the Reciprocal Tax policy
SEFA Media assesses that the US’s high tariffs on Vietnamese goods are creating significant challenges for export businesses, but are also a great opportunity to proactively change strategies and improve competitiveness. Shifting markets, changing production and sales models, and strengthening trade defense capabilities are important solutions to help businesses overcome difficulties. Leading experts in Economics, Finance and Marketing at SEFA will soon have a discussion on Marketing Strategy Perspectives for Vietnamese businesses in the US market after the Tax Reciprocity Policy . Follow us now to participate and update the latest information!
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