UNDP predicts Vietnam’s exports to the US will fall by 20% due to 20% tariffs. Footwear and other goods will be hit hardest.

Vietnam risks losing a fifth of its exports to the US

The 20% US tariffs that came into effect in August could cost Vietnam $25 billion in lost exports a year, almost a fifth of its total, according to the UNDP. This makes the country the most vulnerable in Southeast Asia.

Last year, Vietnam exported $136.5 billion worth of goods to the US, mainly through factories of US and international corporations. In August, after the tariffs were imposed, exports were already down 2% compared to July, and shoe sales were down 5.5%.

Impact on the economy and industries

UNDP estimates that the reduction in exports could reduce Vietnam’s GDP by about 5%. The footwear industry, where Vietnam is the world’s second largest supplier after China, will be hit the hardest. Manufacturers Nike, Adidas and Puma, which place a significant part of their production in Vietnam, will also be hit.

Other countries in the region will suffer less from the tariffs: Thailand could lose 12.7% of its exports to the US, Malaysia 10.4%, Indonesia 6.4%.

Mitigating factors and risks

Analysts note that the impact of the tariffs could last for years and be partially offset by a reorientation of exports to other markets and increased domestic consumption. At the same time, a possible additional 40% duty on goods transiting through Vietnam and containing a significant share of Chinese components remains a risk.

Despite the current exemptions for electronics (28% of Vietnam’s exports to the US), even in this scenario, losses could amount to $18 billion.