[Source/Observer Network Qi Qian] The unpredictable tariff policy of US President Trump has caused a huge impact on Vietnam's vast export industry.

On May 4, The New York Times published an article stating that even with a 90-day deferral period, Vietnamese workers still live in confusion and fear. Several executives from Vietnam's factories said that the factory profit margins are thin, averaging only 5%. Currently, some factories are increasing production to complete shipments before the deferral period ends. However, at the same time, some American customers are canceling orders or delaying new orders, and some factories have started layoffs or frozen recruitment.

When talking about the analysis that Trump might extend the tariff deferral period, a boss of a Vietnamese factory said that if uncertainty continues, customers will choose other suppliers, "Why wait another 90 days? What if the final result is not good?"

"Fear is spreading in Vietnam's factories," Nguyen Thi Tuyet Hanh (Nguyen Thi Tuyet Hanh), aged 40, who works as a production line manager at a factory, earns $577 per month producing shoes for global brands such as Nike. After her husband lost his job in 2023, she worked two jobs six days a week for more than a year. She had no choice because she needed to support four children and keep them in school.

"It's too cruel," said Nguyen Thi Tuyet Hanh. "My family has experienced a difficult period, and I don't want to go through it again."

She revealed that her husband has returned to full-time work at the factory, but Trump's plan to impose a 46% tariff on Vietnamese imports has once again made their lives uncertain.

The report stated that fear echoed in the workshop of her factory, where sewing machines hummed as they sewed materials for shoes destined for the United States. Although Trump decided to defer the "reciprocal tariff" for 90 days, this meant little for them. Over the past 15 years, Vietnam's manufacturing economy has grown rapidly. Now, the uncertainty of tariffs has weakened Vietnam's economic growth, which relies heavily on exports to the U.S.

Exiting Vietnamese workers - U.S. media

On April 2, Trump announced the so-called "reciprocal tariff" on all countries worldwide, causing massive fluctuations in global stock markets, with Vietnam's tariff as high as 46%. However, as economic and political backlash became increasingly apparent, Trump repeatedly revised his policies. On the 9th, after the bond market sell-off drove up U.S. debt interest rates, Trump announced a suspension of the "reciprocal tariff" for 90 days while maintaining the 10% baseline rate.

Notably, Vietnam immediately extended an olive branch to the U.S., indicating its willingness to cancel import tariffs on American goods. However, the U.S. seemed indifferent. At the time, White House Senior Trade and Manufacturing Advisor Peter Navarro claimed that Vietnam's proposal was insufficient to prompt the U.S. government to cancel tariffs on Vietnam.

"Tariffs will strike at the root of Vietnam's export-oriented economic model," The Economist magazine previously analyzed, pointing out that data shows that over the past decade (excluding the pandemic period), Vietnam's average annual economic growth rate was around 7%, with exports to the U.S. accounting for 30% of total exports and 27% of nominal GDP. High U.S. tariffs would roughly halve Vietnam's growth rate.

"Customers are starting to cancel orders; why wait another 90 days?"

For Vietnam-based Mian Apparel, the biggest concern is uncertainty. The company owns seven factories and two laundries, mainly located in northern Vietnam, employing 12,000 workers to produce swimsuits, jeans, and jackets for brands like Costco and Walmart.

"Uncertainty is detrimental to business," said Vu Manh Hung, deputy chief operating officer of Mian Apparel. His clients are urging him to expedite delivery times. Currently, the factory is hiring more workers and simultaneously seeking other ways to increase production before the 90-day tariff deferral period ends.

Tran Quang operates three candle and home fragrance companies in Vietnam. He said he hasn't laid off any workers yet, but he is very anxious now because the next few months are usually peak season for his company, preparing for Christmas orders. But now, he remains inactive and hasn't hired more workers as usual during this time.

Tran Quang said that approximately 90% of his company's clients are in the U.S. In the weeks following the tariff policy, he hadn't received any new orders, which was unsettling. Worse still, some clients have started canceling orders recently, while others have postponed new orders.

"If there is uncertainty, customers may change their supply chains," Tran Quang said when discussing the analysis that Trump might extend the tariff deferral period. "Why wait another 90 days? What if the final result is not good?"

The Vietnamese government is negotiating with the Trump administration regarding tariffs. On April 22, Prime Minister Pham Minh Chinh instructed during negotiations with U.S. tariffs that the Vietnamese team should be well-prepared, avoiding complicating issues, not affecting international agreements Vietnam participates in, not impacting one market due to another, and taking appropriate measures to achieve mutual benefits, harmony of interests, and shared risks.

Trump signed the "reciprocal tariff" executive order targeting a 46% tariff on Vietnam on April 2 - Tweet screenshot

Voices from Vietnamese factory owners: Ultimately, American consumers will pay more

Tran Nhu Tung is chairman of Thanh Cong, a Vietnamese clothing manufacturer. The company operates five factories across Vietnam, employing 6,000 workers to produce clothing for brands such as New Balance and Adidas.

"Now everyone is living under immense uncertainty," said Tran Nhu Tung. His clients in the U.S. have already requested price reductions, "This puts enormous pressure on the company because our profit margins are low." At the same time, some American retail clients are requesting increased production, and the company is striving to meet these demands.

Tran Nhu Tung said that shortly after the tariff announcement, the management team began discussing other regions where products could be sold, such as the Middle East and Europe. The company is also communicating with U.S. clients to ensure they can bear the high import taxes.

"I don't want to lay off workers," said Tran Nhu Tung. "We will do everything possible to retain employees."

Tran Nhu Tung is also vice president of the Vietnam Textile Garment Association. He said that for most factories, the final tariff will far exceed 20%, at which point they will reach a critical breaking point.

As reported, Nike produces about half of its footwear and 28% of its apparel in Vietnam, while Adidas depends on Vietnam for 39% of its footwear and 18% of its apparel. Calculations show that the previous average tariff rate for Vietnamese footwear products entering the U.S. was 13.6%, and for apparel products, it was 18.8%. According to Trump's latest announced rates, products from Nike and Adidas produced in Vietnam will incur more than triple the taxes upon entering the U.S.

In addition, Vietnam is the second-largest supplier for Deckers Brands, parent company of UGG and Hoka, which has 68 supply chain partners in Vietnam. VF Corporation, which owns The North Face, Timberland, and Vans, heavily relies on Vietnam’s manufacturing capabilities. According to December’s manufacturing disclosure data, 17% of the company’s suppliers are in Vietnam.

Vietnam is also a hub for the furniture industry. Investment banking data shows that in 2023, 26.5% of U.S. furniture imports came from Vietnam.

The New York Times reported that currently, the tariff on Vietnamese imports of clothing into the U.S. is nearing 28%. This includes the new 10% tariff imposed by the Trump administration on all countries on April 2, as well as the approximately 18% tariff previously levied on all Vietnamese clothing. If the final tariff reaches 20% or higher, it will severely erode the profits of Vietnam's factories and their clients.

"In this situation, factories must reduce net profits, and then major American buyers must also reduce profits," said Tran Nhu Tung. "Ultimately, American consumers will have to pay more for tariffs and pay more for clothing."

This article is an exclusive contribution from Observer Network and cannot be reprinted without permission.

Original source: https://www.toutiao.com/article/7500533974768173605/

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