Ho Chi Minh City, Vietnam – Kieu Quoc Thanh, the CEO of cashew export business SVC Group, says that everyone in his industry has been “feeling crazy” for the past two weeks.
Since United States President Donald Trump announced his since-paused “reciprocal” tariffs on April 2, Thanh has witnessed mass confusion among Vietnamese exporters.
Many businesses reliant on the US market are checking online hourly for updates on the tariffs, Thanh says, while he has a shipping container full of cashews bound for the US market currently sitting in limbo.
Since Trump announced a 90-day pause on Vietnam’s 46 percent tariff and duties on dozens of other countries, the US has imposed a baseline 10 percent levy on imports from all countries, including Vietnam.
But Thanh’s customers in the US and customs officers alike are uncertain how much to tax his products, he says.
“No one knows what’s happening,” Thanh told Al Jazeera at his Ho Chi Minh City office last week.
While businesses such as Thanh’s navigate the disruption, Hanoi and Washington are in discussions about a trade deal after agreeing to begin negotiations on April 10.
For Vietnam, one of the world’s most export-reliant economies, the stakes could scarcely be higher.
The US is the Southeast Asian country’s biggest export market, with shipments to it alone last year accounting for 30 percent of gross domestic product (GDP).
While Trump’s tariff pause led to some hope in Vietnam, the country is on tenterhooks about what might happen next, said Tyler Manh Dung Nguyen, chief market strategist at equity firm Ho Chi Minh City Securities Corporation.
“We are having a period of extreme uncertainty, not only for the financial market, but also for businesses,” Nguyen told Al Jazeera.
“It’s like a reality show,” Nguyen added. “Everything changes every day.”
Trump’s trade salvoes have drawn sharp contrast with the decades-long process of warming relations between Washington and Hanoi, culminating in the former enemies upgrading their ties to a “Comprehensive Strategic Partnership” in 2023.
For Eddie Thai, a Vietnamese American who co-founded the Ho Chi Minh City-based venture capital firm Ascend Vietnam Ventures, it has been disheartening to see relations come under strain, particularly ahead of the upcoming 50th anniversary of the end of the Vietnam War on April 30.
“I don’t think it has thrown us back 50 years, I wouldn’t say that far, but it is burning a lot of goodwill that a lot of people on both sides of the ocean have been trying to build since the 90s,” Thai told Al Jazeera, calling Trump’s dealing with Vietnam destructive and personally “disappointing as an American”.
With the US and Vietnam looking towards a trade deal, China, Hanoi’s biggest source of imports and its second-largest export destination, has loomed large over the negotiations.
On Monday, Chinese President Xi Jinping visited Hanoi as part of a five-day tour of Southeast Asia, a trip widely seen as an effort to cast China as a more reliable trading partner for the region than the US.
Upon his arrival, Xi was greeted at the airport by Vietnamese President Luong Cuong, and later received a 21-gun salute at Hanoi’s Presidential Palace.
Reacting to the warm reception for the Chinese leader, Trump suggested the countries would use their talks to scheme against the US.
“That’s a lovely meeting. Meeting like, trying to figure out, ‘How do we screw the United States of America?’” Trump told reporters at the White House.
According to Chinese state news outlet Xinhua, Xi urged Vietnam to resist “unilateral bullying” and stated that “China’s mega market is always open to Vietnam”.
During Xi’s visit, the countries signed 45 agreements, Chinese and Vietnamese media reported, without providing details of the deals.
With the US and China slapping each other’s goods with tariffs exceeding 100 percent, Vietnam has become the “diplomatic guy in the middle,” said Nguyen, the strategist at Ho Chi Minh City Securities Corporation.
“[Hanoi] always tries to be neutral in every situation,” Nguyen said. “We do not side with one country to fight another country.”
US trade deficit
Trump’s tariffs have also raised the ire of foreign businesses based in Vietnam.
It would be an impossible task for Vietnam to erase its trade deficit with the US – the third-highest in 2024 at $123.5bn – given the differences between the two economies, said Bruno Jaspaert, general director of DEEP C Industrial Zones in the northern port town of Haiphong.
“Any country like Vietnam, in reality, has no leverage against the States,” Jaspaert, who is also head of EuroCham Vietnam, told Al Jazeera.
“That stupid formula of theirs can never ever be balanced because it will take decades before Vietnam can buy enough,” Jaspaert said, referring to the controversial calculations used by the Trump administration to come up with its “reciprocal” tariff rates.
Facing the threat of a huge economic blow, Hanoi has put considerable effort into getting into the good graces of the Trump administration.
The government has pledged to buy more Boeing planes and liquefied natural gas, and opened talks on purchasing C-130 cargo planes from Lockheed Martin.
Last month, officials agreed to allow Elon Musk’s Starlink satellite internet service to operate in the country on a trial basis.
Vietnam has also signed deals with the Trump Organization.
Shortly before Trump’s re-election, his holding company agreed to invest $1.5bn in a golf course and hotel project in Communist Party chief To Lam’s home province of Hung Yen.
“I believe that the leadership in Hanoi – they have done a lot to secure a more lenient approach,” Nguyen Khac Giang, visiting fellow at Singapore’s ISEAS-Yusof Ishak Institute, told Al Jazeera.
To Lam was one of the first foreign leaders to get on the phone with Trump after his April 2 tariff announcement and sent a delegation to Washington to negotiate with his administration on April 10.
Among his efforts to mollify Trump, To Lam has said he is willing to reduce tariffs on US goods to zero.
“There is no alternative choice for Vietnam other than making peace with the US to secure access to the US market,” Giang said. “The Vietnamese must do what they can to preserve that access.”
Despite the risks for Vietnam, some observers also see opportunities for the country in Trump’s trade war.
In the short term, businesses are ramping up production in order to get goods to the US in the next three months while the 10 percent tariff is still in place.
“Quite a few people are planning to ship out a lot – 10 percent is still doable,” Jaspaert said. “If Trump wants to stand up to his promise, the tariffs will go up again … I don’t believe we’re out of the woods yet.”
In the longer term, Vietnam could again be a beneficiary of increased volatility between Washington and Beijing under Trump.
During Trump’s first term, the Southeast Asian country benefitted from an exodus of factories from China as businesses sought to lessen their exposure to geopolitical risks and trade barriers.
“The real battle here is unashamedly the US against China,” Craig Martin, chairman of Ho Chi Minh City-based private equity firm Dynam Capital, told Al Jazeera.
“You’ve got this uncertainty, this very heated trade war with eye-watering levels of tariffs [between Washington and Beijing].” “You could actually see a silver lining, being people looking to do more in Vietnam,” Martin added.
Vietnam has also been under US scrutiny for shipping goods from China into the US with minimal manufacturing undertaken in Vietnam.
Such scrutiny will likely push Vietnam to invest in more value-added manufacturing, said Nguyen, the market strategist.
“I think there will be a mechanism that has to be agreed by both governments to control that – to make sure that there’s no transhipment,” he said. “I think that would actually be a good thing for Vietnam in the mid to long run.”
Last week, the Reuters news agency reported that Hanoi was offering to crack down on Chinese goods being shipped to the US via its territory and to tighten controls on sensitive exports to China.
The report, which cited a person familiar with the matter and a government document, came after White House trade adviser Peter Navarro raised concerns that Chinese goods were being sent to the US with “Made in Vietnam” labels to avail of lower import taxes.
The US-China tensions could be a “golden opportunity” for Europe to increase its trade with Vietnam and for Hanoi to diversify its trade more broadly, Jaspaert said.
“Vietnam has won all the wars it’s been in, so I believe it will also win the tariff war,” Jaspaert said.