How will the reciprocal tax affect Vietnam's GDP growth?

A representative of the General Statistics Office (Ministry of Finance) answered this question at a press conference announcing socio-economic statistics for the second quarter and the first 6 months of 2025, which took place this morning (July 5).

Deputy Director of the General Statistics Office Le Trung Hieu said that based on the structure of the Inter-Industry Balance Sheet (IO sheet) to assess the impact from both the supply and demand sides, with the assumption that the final demand of the economy decreases when the value of Vietnam's export goods to the US market decreases.

Applying Vietnam's 2019 IO model and data on Vietnam's goods exports to the US in 2024, according to 46 main commodity groups, to assess the impact of reduced demand for Vietnam's goods exported to the US.

Calculations show that if the US imposes an average tax of 10% on Vietnamese export goods, it will have almost no impact on export turnover to the US market and will not affect economic growth.

If the US imposes an average tax of 15% on Vietnam's export goods, it will reduce the value of exports to the US by 6-7.2 billion USD (reduce about 5-6% of goods export turnover), reducing GDP by about 0.4-0.5 percentage points.

In the case that the US imposes an average tax of 20% on Vietnam's export goods, it will reduce the value of exports to the US by 11-12 billion USD (reduce about 9-10% of goods export turnover), reducing GDP by about 0.7-0.8 percentage points.

The impact assessment scenario is also based on other conditions and assumptions, with an elasticity coefficient of about 1-1.2%. However, due to the proportion of export items to the United States that are in high demand or have cheaper alternatives in other competitive markets, the elasticity coefficient may be different.

At the same time, it is assumed that there is no additional impact or expansion of export markets and promotion of existing FTAs.

To cope with fluctuations from changes in US tax policies, Vietnam needs to have measures to encourage investment, diversify export markets, exploit the domestic market and improve the business environment.

This not only helps minimize negative impacts but also facilitates economic restructuring towards enhancing internal strength and sustainable growth.

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Currently, the US is one of Vietnam's leading trading partners, with Vietnam's exports to the US in 2024 accounting for about 29.5% of the country's total export turnover, with a value of 119.5 billion USD.

The main export items include computers, electronic products, components, machinery, equipment, textiles and wood. Some items account for a large proportion of the total export turnover to the US such as: Computers, electronic products and components account for 19.4%; Other machinery, equipment, tools and spare parts account for 18.5%; Textiles account for 13.5%; Phones of all kinds and components account for 8.2%; Wood and wood products account for 7.6%; and footwear account for 6.9%...

Vietnam is the 8th largest trading partner of the US, accounting for about 4% of total US exports.

Source: https://hanoimoi.vn/thue-doi-ung-se-tac-dong-nhu-the-nao-den-tang-tuong-gdp-cua-viet-nam-708110.html