US Reciprocal Tax Policy: Golden Time to Stimulate Domestic Demand

(Photo: My Phuong/ VNA)

Although the US reciprocal tax policy has been suspended for 90 days, this development still has potential impacts on Vietnam's economy .

In addition to the solution of avoiding dependence on a few large markets or traditional markets with tax risks, renewing the driving forces to stimulate consumption is an urgent task that helps businesses have more growth expectations and stimulate purchasing power, creating momentum for the domestic market.

Stimulating demand and promoting domestic consumption is identified as one of the three key driving forces to boost Vietnam's economic growth in 2025.

At a time when exports are facing difficulties, focusing on the domestic market is a strategy that many businesses are aiming for. If previously, businesses devoted 10-20% of production to export, now this figure has increased to 95% of production for the domestic market.

At the same time, businesses also look for suitable raw materials to reduce costs and produce more products suitable for consumers.

A representative of Garment Corporation 10 - JSC said that previously most of the production lines were for export orders, but now they are focusing on designing new models and opening more stores to serve Vietnamese consumers.

In addition, the company also saves on other norms and activities as well as increases investment in equipment and technology to increase labor productivity and efficiency to have competitive prices.

According to Mr. Tran Anh Thang, member of the Board of Directors of the Vietnam Export Import Commercial Joint Stock Bank (Eximbank), US tariffs can create opportunities for Vietnamese goods to replace, bringing domestic consumption to the forefront. Because when imported goods are more expensive, Vietnamese goods can be prioritized, thereby promoting domestic consumption if supply and quality are guaranteed. Therefore, this is a golden time to stimulate domestic demand, through promoting consumption of Vietnamese goods.

Mr. Phan Van Chinh - Deputy Director of the Department of Domestic Market Management and Development ( Ministry of Industry and Trade ) analyzed that the development of the domestic market has advantages such as the total domestic budget (GDP) in the first quarter of 2025 is estimated to increase by 6.93% compared to the same period in 2024, which will support income and consumption demand this year. At the same time, public investment is promoted to help increase the income of workers in the construction and infrastructure sectors, thereby promoting consumption.

Textile and garment processing factory for export. (Photo: Hong Dat/VNA)

Along with that, the Government continues to implement support programs such as reducing value-added tax (VAT) and supporting interest rates for retail businesses. The increase in minimum wages and improved disposable income of people also help increase domestic spending.

In addition, consumers are increasingly accustomed to online shopping, making it easier for businesses to reach customers through digital platforms. Many shopping malls, supermarkets, and convenience stores are expanding, making domestic goods more accessible to consumers.

However, challenges from the global economy show signs of decline; the change in consumer shopping behavior from offline to online has left many businesses unable to adapt to the new trend.

On the other hand, small businesses selling local products still face difficulties in bringing their products into supermarkets and shopping malls due to high display costs and complicated procedures.

Furthermore, cross-border e-commerce is growing strongly, consumers can easily buy goods directly from abroad, affecting the consumption of goods in the domestic market.

According to Ms. Tran Thi Phuong Lan - Vice President of the Vietnam Retailers Association, besides the mentality of tightening spending and focusing only on purchasing essential goods for daily life, the inflation situation and political fluctuations in world trade also affect people's consumption.

In addition, the logistics system and commercial infrastructure in provinces and cities have not developed evenly, increasing costs and making them unable to compete with international products. This affects spending, consumption and growth of total retail sales of goods and services.

Recently, the Ministry of Industry and Trade issued Directive No. 08/CT-BCT on implementing solutions to continue promoting domestic market development and stimulating consumption in 2025.

This is also the first time the Ministry of Industry and Trade has assigned targets to its units, the Department of Industry and Trade of provinces and cities, corporations, general companies, companies, and industry associations to strive to bring the total retail sales of goods and services to about 12% in accordance with the spirit of Resolution No. 25/NQ-CP dated 10/11/2018 of the Government on growth targets for industries, sectors and localities to ensure the national growth target of 8% or more in 2025.

Mr. Tran Huu Linh, Department of Domestic Market Management and Development, emphasized four key focuses to develop the domestic market, such as perfecting legal policies; improving business capacity; strengthening market supervision and trade promotion; and developing trade infrastructure.

In particular, Director Tran Huu Linh especially emphasized the role of perfecting policies and laws. This is a difficult task, requiring perseverance and method due to the large amount of work and high professional requirements.

However, now is a favorable time to build a synchronous legal system, creating a solid foundation for the stable and long-term development of the domestic market.

In addition, the system of policies for domestic market development is quite complete, however, in the coming time, it is necessary to focus on the Domestic Market Development Strategy; the system of legal documents; standards for classifying markets, supermarkets, and shopping centers; standards for logistics centers; regulations on labeling "Made in Vietnam"; the franchise mechanism; and annual domestic market reports.

In particular, these policies need to be reviewed and updated promptly to suit the practical situation and new market requirements.

"Promoting administrative procedure reform, cutting unnecessary processes and issuing breakthrough policies; prioritizing the expansion of the retail network, developing outlet models (online and direct), warehouses and logistics centers are key factors to enhance competitiveness, ensure a seamless supply chain and serve consumer needs well," Mr. Tran Huu Linh affirmed.

Source: https://baobinhphuoc.com.vn/news/4/172903/chinh-sach-thue-doi-ung-cua-hoa-ky-thoi-diem-vang-de-kich-cau-noi-dia