Proactively adapt and seek opportunities when the US imposes 20% reciprocal tax

Production of gardening machines for export to the US market at Greenworks Vietnam Co., Ltd., Lien Ha Thai Industrial Park.

Signals from taxes

According to information from the Ministry of Industry and Trade , in the early morning of August 1 (Vietnam time), the White House posted President Donald Trump's Decree on adjusting the reciprocal tax rate. Accordingly, the United States decided to adjust the reciprocal tax rate for 69 countries and territories listed in Appendix I. According to this Appendix, the reciprocal tax rate for Vietnam decreased from 46% to 20%.

This tax rate officially took effect from August 7, that is, after 7 days. This tax rate is assessed by experts as having a strong impact on the export of Vietnamese goods to the US market, Vietnam's largest trading partner. In Hung Yen , there are currently over 500 exporting enterprises, many of which produce textiles, footwear, construction materials, electronics, components, etc., which have a large market share in the US. The new tax rate that the US imposes on goods from Vietnam at 20% is causing many difficulties and may slow down growth.

Dynamic Quartz stone product production line exported to the US market of Thien Hoang - Mikado Technical and Commercial Joint Stock Company, Tien Hai Industrial Park.

Businesses face many pressures

In a quick exchange with us, Mr. Bui Van Son, Chairman of the Board of Directors of Long Hau Ceramics Joint Stock Company (Tien Hai Industrial Park) said: The 20% reciprocal tax rate of the US can be considered a trade negotiation effort of the Government to help protect businesses. However, this is still a high level that makes it difficult for businesses exporting to the US market, especially in industries such as textiles, construction materials, etc. If there is no way out, high tax imposition will increase product prices, and partners may transfer orders to countries in the region with lower tax rates than Vietnam.

Similarly, Thien Hoang - Mikado Technical and Commercial Joint Stock Company (Tien Hai Industrial Park), a company that exports nearly 10 million USD worth of Dynamic Quartz brick and stone products to the US market each year, is facing unprecedented difficulties. Mr. Pham Bach Tung, Chairman of the Board of Directors and General Director of the Company, shared: Previously, our goods were still subject to a 10% tax by the US. In order to compete and convince import partners, we had to negotiate to reduce prices in the spirit of sharing difficulties. Now, the US has imposed a new tax rate of 20%, which will cause many more obstacles for businesses in negotiating with partners and customers; the market competitiveness of products may be seriously affected, especially compared to cheap Chinese goods. If the tax increase continues, it will directly impact the profits and growth rate of businesses in the fourth quarter of this year.

For Greenworks Vietnam Co., Ltd. (Lien Ha Thai Industrial Park), a company specializing in manufacturing gardening equipment and machinery for export to the US, the 20% tax on goods has not had much impact on production and business activities in the short term, but in the long term it will cause certain difficulties. Mr. Nguyen Van Doan, Head of Import and Export Department of the Company, said: In 2024, our total export turnover reached more than 300 million USD. Since the beginning of the year, production and export activities have remained stable. The 20% reciprocal tax rate that Vietnam has negotiated with the US is an acceptable level because it still creates competitiveness with other countries in the region, where our competitors are located. However, if the business does not promptly restructure from management to production processes to optimize product costs, in the long run it will cause slow development due to reduced profit margins.

Export household porcelain production activities of Long Hau Ceramics Joint Stock Company, Tien Hai Industrial Park.

How to adapt to the tariff challenge?

In the current context, experts recommend that businesses need to quickly move from a passive position to proactive adaptation. Mr. Do Van Ve, Chairman of the Thai Binh Province Business Association (formerly) shared: Businesses need to diversify export markets. The US is a large market but cannot be the only one. At the same time, proactively exploiting more markets such as the EU, ASEAN, and Japan, where Vietnam has signed extensive FTAs and has preferential tax rates. Along with that, optimizing costs, improving internal strength by improving technology, reducing dependence on imported raw materials, and optimizing production processes will be effective "shields" against tax "shocks".

Textiles and garments is one of the industries that has been greatly affected when the US imposed a 20% reciprocal tax on imported goods from Vietnam, effective from August 7. Ms. Trinh Thi Bich Ngoc, Director of Bao Hung Joint Stock Company (Son Nam Ward) expressed concern about the difficulties that may arise in the coming time. Ms. Ngoc said: We are a unit specializing in manufacturing export garment products, supplying the market with about 3 million products each year, exporting to countries such as Japan, Korea, European countries and the US. Currently, the enterprise has no plans to export to the US market in the fourth quarter of this year, due to disadvantages from the new tax policy. The company is looking for solutions to cope, in which priority is given to expanding market share in other markets such as Japan, Korea and increasing the proportion of exports to European countries to reduce dependence on the US market.

Many businesses also believe that building negotiation capacity and transparency in traceability is a practical solution to help businesses take advantage of rules of origin to enjoy incentives from other FTAs and increase trust with partners. Mr. Pham Bach Tung added: In addition to high-standard quality and product designs, trade negotiations with US partners are very important to be able to bring goods into this market. Therefore, it is necessary to be fully equipped with legal knowledge, clearly understand the advantages and limitations of each party to come up with specific solutions during the negotiation process to achieve the final result in the direction of mutual benefit and risk sharing.

Bao Hung Joint Stock Company (Son Nam ward) is boosting production and aiming to expand export markets to Japan, Korea and European countries.

Although the 20% reciprocal tax rate is a big challenge, in the long term, this is also an opportunity for businesses in the province and the whole country to look back at themselves. From there, they can restructure production, increase domestic value, and reduce dependence on a single market. Import-export businesses also hope that central ministries, branches, and local authorities will support information, have policies to remove obstacles, promote production, and expand markets. If they can overcome this difficult period, many businesses will have stronger resistance to global trade "shocks".

Khac Duan

Source: https://baohungyen.vn/chu-dong-thich-ung-tim-co-hoi-khi-my-ap-thue-doi-ung-20-3183572.html