Trans-Pacific View author Mercy Kuo regularly engages subject-matter experts, policy practitioners and strategic thinkers across the globe for their diverse insights into U.S. Asia policy. This conversation with Dr. Nguyen Khac Giang – visiting fellow at the Iseas-Yusof Ishak Institute in Singapore – is the 455th in “The Trans-Pacific View Insight Series.”
Explain how Vietnam has benefitted from U.S.-China trade tensions.
Vietnam has deftly converted U.S.-China tensions into economic opportunity. Maintaining cordial relations with both powers, it became the preferred destination for manufacturers seeking shelter from tariffs and instability, particularly in electronics and high technology. Global giants like Apple, Samsung and Intel have substantially expanded their Vietnamese operations since 2018 – the start of the trade war.
American tariffs on Chinese goods have simultaneously boosted demand for Vietnamese exports, which often serve as direct substitutes for newly expensive Chinese products. This demand surge, coupled with organically strengthening economic ties with the United States, explains Vietnam’s remarkable export growth. Vietnamese shipments to the United States have nearly tripled since 2017 to nearly $140 billion in 2024.
These developments have cemented Vietnam’s position as a crucial link in global supply chains, demonstrating the country’s adroit economic diplomacy amid intensifying great-power competition. The country is among the best economic performers in Asia in the past few years.
Examine how growing Chinese investment and supply chains in Vietnam could make the country vulnerable to U.S. tariffs.
China remains Vietnam’s largest import market, providing approximately half of all inputs for Vietnamese manufacturers. Simply put, Vietnam’s manufacturing sector depends heavily on Chinese suppliers, making economic decoupling virtually impossible. Bilateral economic ties have further strengthened since the trade war began, as manufacturers – including Chinese firms – continue choosing Vietnam as the primary destination for their China plus one strategy.
As production shifts across the border into Vietnam, its trade deficit with China has widened conspicuously. This growing imbalance, juxtaposed against Vietnam’s substantial trade surplus with the United States, invites scrutiny – particularly in Washington – that Chinese goods may be circumventing tariffs through Vietnamese transshipment. While rigorous studies, including notable research by Harvard Business School, have largely debunked allegations of systematic tariff evasion, perception frequently trumps evidence in American trade policy under the Trump administration.
Therefore, despite factual reassurances, Vietnam remains vulnerable to punitive U.S. trade measures – which are likely triggered more by impressions than reality. This vulnerability highlights a central risk embedded in Vietnam’s intricate economic relationship with its northern neighbor.
Identify Hanoi’s leverage points in mitigating risks of Vietnam’s trade imbalance with the United States.
Hanoi holds several strategic cards to mitigate the risks associated with its trade imbalance with the United States.
First, Vietnam has cultivated a pragmatic, transactional approach with the Trump administration. It has offered the Trump Organization an opportunity to develop a $1.5 billion golf complex in Hung Yen Province – tellingly, the hometown of Vietnam’s top leader, To Lam. Immediately following the U.S. election, Vietnam’s wealthiest businesswoman and Vietjet owner visited Mar-a-Lago, committing to purchase 100 Boeing aircraft at Trump’s suggestion. Other Vietnamese conglomerates like Vingroup have similarly pledged expanded American investments. These commercial initiatives have mollified American concerns by demonstrating reciprocal economic engagement, evident in recent high-level trade discussions between Vietnamese Minister of Industry and Trade Nguyen Hong Dien and U.S. Trade Representative (USTR) Jamieson L. Greer.
Second, Hanoi can leverage its geopolitical value as a crucial “swing state” in America’s broader Indo-Pacific strategy. As the great power competition intensifies, Washington will increasingly want Hanoi on its side – or at the very least, ensure it does not drift closer to Beijing.
Finally, Vietnam’s constructive relationship with Beijing can provide Washington with discreet channels for backdoor diplomacy – a valuable asset amid deteriorating U.S.-China relations. Vietnam’s nuanced understanding of Chinese strategic thinking can also offer the U.S. insights into its principal global competitor.
Evaluate Hanoi’s effectiveness in balancing U.S.-China strategic competition for Vietnam’s advantage.
Hanoi has demonstrated remarkable dexterity in navigating U.S.-China competition since 2018. By capitalizing on trade tensions, Vietnam has secured substantial economic dividends –attracting significant foreign investment and strengthening its position in global supply chains. Diplomatically, its pragmatic engagement with Washington has helped counterbalance China’s regional influence. At the same time, Hanoi’s skillful maneuvering, exemplified through high-profile commercial agreements, has shielded it from punitive U.S. trade measures despite growing bilateral trade imbalances.
Yet, vulnerabilities persist. Economically, Vietnam’s heavy dependence on Chinese inputs and widening trade deficit with Beijing expose it to accusations of tariff circumvention, potentially triggering U.S. retaliation. Geopolitically, intensifying superpower competition increases the risk of regional conflicts, whether in the South China Sea or the Taiwan Strait. Vietnam’s collateral damage will be enormous in either scenario.
Assess Hanoi’s priorities in managing U.S.- Vietnam relations in the Trump era.
In the second Trump era, Hanoi’s management of U.S.-Vietnam relations continues to prioritize stability, pragmatism, and strategic caution. First and foremost, Hanoi will seek to avoid becoming a target of punitive American tariffs by actively demonstrating goodwill – highlighted through large-scale commercial transactions, increased Vietnamese investment into the American economy, and tougher acts against any signs of illegal transshipment.
Simultaneously, Hanoi will position itself as an indispensable partner in Washington’s broader geopolitical strategy, carefully leveraging its significance in the American network without provoking Beijing. Hanoi aims to keep the U.S. sufficiently close to help counterbalance China, yet not so close as to create the impression in Beijing that it is “ganging up” against China.
Ultimately, Hanoi aims at maximizing economic and security gains while avoiding being entangled in America’s turbulent politics and its intensifying competition with China.