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Vietnam faces the steepest losses in Southeast Asia from the recent US tariffs, with exports to America projected to fall by nearly USD 25 billion, or about one-fifth of the total shipped last year. UNDP estimates show that Vietnam's dependence on the US market makes it more vulnerable than regional peers such as Thailand, Malaysia, and Indonesia. The first trade figures since the tariffs came into force already show a decline in shipments, particularly in footwear. The World Bank has cut Vietnam's growth forecast, while global brands sourcing from Vietnam have stayed silent on the issue.
The United Nations Development Programme (UNDP) has cautioned that newly imposed US tariffs could significantly reduce Vietnam's exports to its largest market. The 20% duties, which came into effect in early August, may lower shipments by over USD 25 billion, equal to almost one-fifth of last year's exports to America. Philip Schellekens, UNDP's chief economist for the Asia-Pacific region, explained that in a worst-case scenario of high inflation in the US, the fall in exports could exceed this estimate. Advertisement
Vietnam ranked as the sixth-largest exporter to the US last year, with goods worth USD 136.5 billion, largely produced by multinational companies or their suppliers operating in the country. The first official figures released after the tariffs show a 2% monthly drop in August exports to the US. Footwear, one of Vietnam's strongest export categories, fell by 5.5% during the same period. Before the duties began, exports had increased sharply as firms rushed to ship goods ahead of the tariff deadline.
The impact of the tariffs is already reshaping projections. The World Bank revised its growth outlook for Vietnam downwards soon after the duties took effect. Footwear manufacturers, including Nike, Adidas, and Puma, who rely heavily on Vietnamese suppliers for their global output, declined to comment on the developments.
According to the UNDP's analysis, Vietnam's exports to the US could decline by 19.2%, almost double the regional average drop of 9.7% expected across Southeast Asia. Thailand, Malaysia, and Indonesia may see declines of 12.7%, 10.4%, and 6.4% respectively. UNDP data also suggest that the estimated losses could reduce Vietnam's Gross Domestic Product by around 5%, although the effects would take time to fully materialize.
The report also highlights areas not included in the estimates. One risk is stricter US scrutiny of goods transhipped through Vietnam, which could be damaging given Vietnam's heavy reliance on Chinese inputs. Another is the possibility of tighter restrictions on foreign components in exported items. At present, consumer electronics accounting for 28% of Vietnam's exports to the US are exempt from tariffs. Even with this exemption, Schellekens noted that Vietnam's exports could still fall by USD 18 billion.
The UNDP added that the actual impact may be softened over time. Vietnamese exporters could absorb part of the costs, the country is diversifying its markets beyond the US, and stronger domestic demand may provide some support. Still, no other country in Southeast Asia is as exposed to US tariffs as Vietnam, with only China facing a larger hit in absolute dollar terms.
Source: Reuters
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