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As the United States implements higher tariffs on imported goods, Vietnamese businesses need to prepare contingency plans. This involves developing contingency financial plans, calculating the cost impact of various tariff scenarios to secure reserve capital, and restructuring costs.

Electronics Products Accounted for 34.9% of Total Exports to the US in 2024

The electronics industry plays a crucial role in Vietnam’s economy, representing 17.8% of the total industrial value and positioning Vietnam among the top 15 largest electronics exporting nations globally. According to data from the Vietnam Electronic Industries Association (VEIA), electronics export turnover in 2024 exceeded $126.7 billion, accounting for over 30% of the country’s total export turnover and marking a 10% increase from the previous year.

In terms of production structure, Vietnam’s electronics industry primarily focuses on manufacturing electronic and optical products. However, Vietnamese enterprises are mostly small and medium-sized, participating in low-cost assembly stages and heavily reliant on China (30-80% depending on the sector).

At the recently held M-TALKS 2025 Manufacturing Industry Forum, themed “Innovating the Future of Vietnam’s Electronics Manufacturing Industry: Applying Artificial Intelligence (AI), Automation, and Global Supply Chain Integration,” Ms. Do Thi Thuy Huong, Executive Board Member of VEIA, stated that the US is Vietnam’s largest export market, accounting for approximately 29% of its total export turnover.

Within this, the electronics industry’s share of exports to the US reaches over 40% in some segments. Among Vietnam’s main export categories to the US in 2024, electronic machinery, equipment, and sound recording devices reached $41.7 billion, representing 34.9% of Vietnam’s total export turnover to the US.

Assessing the impact of higher US tariffs on imports from Vietnam’s electronics sector, Ms. Huong noted that increased tariffs could raise production costs for Vietnamese businesses. Rising raw material prices and increased production costs would impact profitability and competitiveness. Tariffs could also increase logistics costs for businesses.

Regarding the impact of increased US tariffs on Vietnamese imports, the General Statistics Office (GSO) under the Ministry of Finance presented three scenarios assessing the impact of US countervailing duties on Vietnam’s economic growth during a press conference on July 5, announcing socio-economic data for Q2 and the first half of 2025. The GSO representative also mentioned export sectors likely to be affected by countervailing duties. Accordingly, electronic components, phones, and computers are among the groups expected to see a significant decline, with a calculated reduction of approximately 4 percentage points.

In this context, to cope with fluctuations arising from changes in US tariff policies, the GSO proposes that Vietnam implement measures to encourage investment, diversify export markets, tap into the domestic market, and improve the business environment.

Businesses Must Restructure Production, Enhance Value-Added

According to the VEIA representative, current difficulties also present an opportunity for Vietnam to restructure its supply chains, accelerate digital transformation, and expand markets through Free Trade Agreements (FTAs) and cross-border e-commerce. To adapt to US tariff policies, Ms. Do Thi Thuy Huong recommends that businesses also increase negotiations for short-term contracts, leveraging the low-tariff period. They should seek cost-saving transportation solutions, such as collaborating with major shipping lines or utilizing low-cost transit ports, to mitigate cost pressures if tariffs increase.

Concurrently, businesses must prepare contingency plans for various tariff levels by creating contingency financial plans, calculating the cost impact of different tariff scenarios to prepare reserve capital, restructuring costs, or negotiating loans with preferential interest rates. Furthermore, maintaining close contact with the Ministry of Industry and Trade and industry associations is crucial for staying updated on information and policies, and participating in trade promotion programs. Diversifying export markets by leveraging the 17 FTAs Vietnam has signed with nearly 70 economies is key to reducing reliance on the US market.

Businesses can explore potential markets such as India, the Middle East, or Africa, and invest in market research and brand building in new markets. A vital solution is for businesses to restructure production and enhance value-added. This involves investing in green technology and products, transitioning to sustainable production methods like using renewable energy and environmentally friendly materials to meet the stringent standards of the US and other developed markets. This approach will also boost competitiveness if the US imposes additional non-tariff barriers.

Additionally, businesses need to accelerate the production of high value-added goods such as semiconductor components, AI products, or medical devices, which are priorities in US-Vietnam cooperation. Simultaneously, they must prepare for non-tariff risks by complying with rules of origin, strengthening intellectual property protection, and ensuring products do not infringe on copyrights or patents.