Vietnam is taking steps to address US concerns regarding trade practices and potential tariff evasions, according to government documents.

These measures follow scrutiny over Chinese goods allegedly being re-exported to the US with “Made in Vietnam” labels to bypass higher tariffs.

The Vietnamese government has committed to strengthening controls on exports of dual-use goods, such as semiconductors. These goods can be used for both civilian and military purposes.

A draft decree prepared at the request of the trade ministry outlines new procedures for declaring and approving the trade of sensitive products.

These actions come after a 46% US tariff was temporarily suspended for 90 days on certain Vietnamese goods.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Vietnam’s export-dependent economic model creates unique vulnerabilities

Vietnam’s dramatic economic transformation stems from its export-focused development strategy, with exports constituting an extraordinary 99.2% of its GDP, making it exceptionally vulnerable to trade disruptions and tariffs 1.

This dependency explains why Vietnam is willing to make significant concessions to the U.S., including cracking down on transshipment and tightening controls on sensitive exports, as the stakes are high for its economy.

The country’s transition from one of the world’s poorest nations to middle-income status through “Đổi Mới” reforms in 1986 opened its markets but created this trade dependency, with GDP per capita growing from approximately $230 in 1985 to over $2,300 by 2017 1.

Vietnam now faces the challenge of maintaining these economic gains while navigating increasingly complex trade politics, particularly as the proposed 46% tariff would severely impact its export-dependent growth model.

The country’s underdeveloped domestic supply chain, identified in industry surveys, further increases vulnerability, as it lacks the integrated economic infrastructure to quickly pivot away from export dependency 2.

2️⃣ Caught between superpowers: Vietnam’s delicate balancing act

Vietnam’s position represents a classic small-nation dilemma, maintaining good relations with competing superpowers while preserving economic sovereignty and national interests.

The country has deep economic integration with China, hosting over 4,000 Chinese investments worth more than $26 billion, while simultaneously serving as an alternative manufacturing hub for companies leaving China amid U.S. tariffs 3.

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