The United States is urging Vietnam to reduce its reliance on Chinese technology in products manufactured locally for export to the US.

This request is part of ongoing discussions as the US considers imposing tariffs of up to 46% on Vietnam-made goods, with a deadline set for July 8.

Vietnam has become a manufacturing hub for major technology firms, including Apple and Samsung. These companies often use components sourced from China.

Additionally, companies like Meta and Google assemble devices such as virtual reality headsets and smartphones in Vietnam using Chinese parts.

Vietnamese authorities are meeting with local businesses to promote the use of domestically produced components. While companies express a willingness to comply, they emphasize the need for time and technological advancements to meet these expectations.

This US initiative is part of broader efforts to restructure supply chains and minimize reliance on Chinese high-tech components. Products assembled in Vietnam, including virtual reality devices, are heavily dependent on Chinese technology.

Vietnam exported US$33 billion worth of tech products to the US, representing 28% of its total exports to the American market, according to customs data.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Vietnam’s unique position in the US-China supply chain triangle creates challenging economic dynamics

Vietnam’s dramatic growth as a manufacturing hub has positioned it in a delicate balancing act between two economic superpowers with increasingly divergent interests.

US goods imports from Vietnam surged to US$136.6 billion in 2024, marking a 19.3% increase from the previous year, while the trade deficit expanded to $123.5 billion 1.

This growth stems directly from the U.S.-China trade conflict, which caused US imports of tariffed goods from China to fall by $31 billion in early 2019 alone, with Vietnam capturing a significant portion of that redirected manufacturing 2.

Yet Vietnam remains heavily dependent on Chinese inputs, with China exporting US$44 billion in tech components to Vietnam annually, representing 30% of its total exports to the country 3.

This dependency creates a complex situation where Vietnam needs Chinese components to support its manufacturing ecosystem while facing pressure from the US to reduce this reliance.

The situation illustrates a fundamental challenge in supply chain restructuring: while assembly operations can relocate relatively quickly, the deeper component and materials supply networks developed over decades in China cannot be easily replicated.