The United States’ imposition of new tariffs in August could wipe out up to 20% of Vietnam’s exports to its largest trading partner, placing the country as the most exposed in Southeast Asia, according to estimates from the United Nations Development Programme (UNDP).
Vietnam, which last year ranked as the world’s sixth-largest exporter to the U.S. with shipments totaling USD 136.5 billion, faces potentially steep declines if the full weight of American duties takes hold. Much of these exports stem from manufacturing operations run by U.S. and global multinationals or their suppliers in the country.
Philip Schellekens, UNDP chief economist for Asia-Pacific, warned that the 20% tariffs could slice Vietnam’s annual U.S. exports by more than $25 billion—nearly a fifth of current levels.
The first comprehensive data released since the tariffs took effect on August 7 shows Vietnam’s exports to the U.S.—its single largest market—fell 2% in August compared with July, according to the customs department. The country’s shipments of footwear, where Vietnam stands as the world’s second-largest supplier, declined 5.5%. The data follows a rush in exports ahead of the tariff deadline.
These developments have already prompted the World Bank to downgrade its growth outlook for Vietnam this year.
Schellekens also warned that Vietnam is exposed to the U.S. tariff more than countries in Southeast Asia, while adding that only China would experience a greater absolute impact in East Asia.
According to UNDP’s published report, the average projected drop for Southeast Asia’s export to the U.S. is about 9.7%, nearly half of Vietnam’s 19.2% potential fall. Among Southeast Asia’s major economies, Thailand’s exports to the U.S. could fall 12.7%, Malaysia’s by 10.4%, and Indonesia’s by 6.4% should the tariff scenario play out.
The projected hit to Vietnam’s U.S. shipments would roughly equate to a 5% reduction in GDP. The full effect may unfold over several years, as some exporters are likely to absorb a portion of costs, with further mitigation expected from Vietnam’s efforts to diversify trade partners and stimulate domestic demand.
The UNDP’s scenario assumes full pass-through of tariff costs to U.S. consumers—which to date has not fully materialized, given only a moderate effect on American inflation thus far.
The report also cautions that the estimates do not include the influence of potential 40% tariffs on goods transshipped through Vietnam. If the U.S. opts to tightly restrict foreign content in imports, Vietnamese exports could suffer more acutely, due to their reliance on Chinese components.
Furthermore, current U.S. tariff exemptions for consumer electronics—accounting for about 28% of Vietnam’s U.S.-bound exports—are not factored into this analysis. However, even if these waivers remain, Vietnam could still lose $18 billion in exports, according to Schellekens.
