The domino effect of US tariff policy.

As tariffs on imported goods are likely to continue to significantly impact domestic and foreign-invested enterprises, accelerating institutional and policy reforms is becoming increasingly important for Vietnam to maintain its attractiveness and competitiveness.

As tariffs on imported goods are likely to continue to significantly impact domestic and foreign-invested enterprises, accelerating institutional and policy reforms is becoming increasingly important for Vietnam to maintain its attractiveness and competitiveness.

The domino effect of US tariff policy.

In February, U.S. President Donald Trump announced a series of escalating tariffs targeting key U.S. trading partners, including Canada, Mexico, and China, as well as tariffs on imported steel and aluminum and a plan to apply reciprocal tariffs worldwide .

This raises renewed concerns about a global trade war, which could severely damage struggling economies .

Economic experts say that Vietnamese businesses and FDI businesses in Vietnam do not operate in isolation but are part of a global supply chain. When the US imposes tariffs on goods from a country, it not only affects exports from that country to the US but also impacts suppliers in third countries – including Vietnam.

According to a report by the Vietnam Chamber of Commerce and Industry (VCCI), if the US imposes tariffs on products originating from Vietnam, the consequences will not be limited to domestic businesses but will also strongly impact FDI enterprises. For example, a multinational corporation might have a factory producing components in Vietnam, assembling them in Thailand, and then exporting them to the US. When the US adjusts tariffs on one link in this chain, businesses will have to reassess their production strategies, posing a difficult challenge for Vietnam in retaining investment.

On the other hand, the supply chain for electronic components and products is a significant source of budget revenue and a strength of Vietnam. Potential risks leading to a depletion or loss of this revenue source will create further difficulties for achieving economic development goals and attracting FDI.

Regional competition and institutional challenges

Economists argue that, in the face of external tariff pressures, legal reforms will continue to be a crucial tool for a country to maintain its attractiveness and competitiveness. The Vietnamese government has made significant progress in improving the business environment. However, further improvements are needed to create an even more favorable business environment for the business community.

“British businesses continue to expect further and more extensive improvements. Streamlining customs procedures, tax compliance, and licensing is considered particularly crucial. A fast, efficient, and transparent administrative system will significantly facilitate businesses, especially in scaling operations and accessing markets,” said Denzel Eades, Chairman of the British Chamber of Commerce in Vietnam (Britcham).

Mr. Nguyen Quang Vinh, Vice President of the Vietnam Chamber of Commerce and Industry (VCCI), emphasized that policy stability is a key factor, as large investors need a business environment with low risk and predictability.

Mr. Nguyen Quang Vinh, Vice President of VCCI, Chairman of the Vietnam Business Council for Sustainable Development.

Citing recent policies regarding the smoke-free industry, Mr. Vinh stated that while the ban on tobacco products, implemented in Vietnam from 2025, aims to prioritize public health, it could impact the industry, particularly by potentially reducing FDI attraction in the manufacturing, distribution, and trading of related products (e.g., the production of electronic equipment and components).

Previously, changes in the feed-in tariff (FIT) policy also posed significant challenges for FDI businesses operating in the renewable energy sector in Vietnam. The shift from a fixed preferential electricity purchase price (FIT) to competitive bidding exposed investors to greater risks, particularly regarding uncertainty in determining electricity selling prices and the ability to recover capital.

According to VCCI, in the context of regional countries such as Indonesia, Malaysia, and the Philippines actively improving their investment environments to attract foreign investment, Vietnam is facing the risk of FDI relocation if it does not have appropriate policies.

In 2024, South Korea was the second largest investor in Vietnam (after Singapore) with nearly US$7.06 billion. Source: Foreign Investment Agency.

Mr. Vinh noted that labor costs and tax incentives are no longer absolute advantages, as neighboring countries are also actively adjusting their investment attraction policies. Given these challenges, the Vietnam Chamber of Commerce and Industry (VCCI) recommends that, to maintain the attractiveness and competitiveness of Vietnam's investment environment, it is necessary to improve the quality of human resources to meet the needs of FDI enterprises in high-tech industries; promote the development of digital infrastructure and logistics to facilitate businesses; and strengthen selective incentive policies targeting high-value and sustainable industries.

"It is necessary to ensure transparency and stability of policies so that businesses can invest confidently in the long term. Vietnam needs to continuously improve its investment environment and have a flexible FDI attraction strategy to maintain its position in the region," the Vice President of VCCI emphasized.

On the other hand, experts also emphasize that the rise of blockchain, AI, and cryptocurrencies demonstrates that the future of the world will gradually be shaped by technological products. Therefore, a country possessing numerous sources of technological investment is a significant advantage.

Source: https://baodautu.vn/hieu-ung-domino-tu-chinh-sach-thue-quan-cua-my-d250210.html