Vietnam's US Exports Could Fall by a Fifth Under New Tariffs, UN Warns
Massive order cancellations are expected to see Vietnam's exports to the United States plummet by as much as one-fifth, according to a United Nations assessment, making it the hardest-hit nation in Southeast Asia.
The United Nations Development Programme (UNDP) estimates that Vietnam's exports to the US could decline by up to US$25 billion following the implementation of new US tariff policies in August. The findings were part of the UNDP's first trade volume assessment since the tariffs took effect, released on 18 September.
The report indicates that as the tariffs drive price increases, Southeast Asia's total exports to the US may decline by 9.7%. Vietnam, however, faces a potential drop of 19.2%-double the regional average. US trade data shows Vietnam was the world's sixth-largest exporter to the US last year, with total exports reaching US$136.5 billion.
Philip Schellekens, UNDP's Chief Economist for Asia-Pacific, told Reuters that in a worst-case scenario where the tariffs contribute to US inflation, the 20% duty on Vietnamese goods could gradually reduce the country's exports to the US by over US$25 billion. This figure represents approximately one-fifth of its annual total. Within the Asia-Pacific region, Vietnam faces the second-greatest impact in terms of export value, after China.
As the world's second-largest exporter of footwear, Vietnam is already feeling the effects. Customs data shows that since the tariffs took effect on 7 August, Vietnam's overall exports to the US declined by 2% in August compared to July, with footwear exports falling by 5.5%.
The UNDP projects that the reduced exports to the US could shrink Vietnam's GDP by approximately 5%. The World Bank has already revised down its economic growth forecast for Vietnam this year as a result.
This assessment does not yet factor in the potential impact of the US imposing 40% tariffs on goods transhipped through Vietnam. The report warns that should the US impose strict restrictions on foreign components used in exported goods, it would deal a severe blow to Vietnam's exports, which are highly reliant on Chinese components.
The report also excludes exemptions for consumer electronics, which account for approximately 28% of Vietnam's total exports to the US. However, Mr. Schellekens contends that even if the US maintains these tariff exemptions, Vietnam's exports to America could still decline by US$18 billion.
Among Southeast Asian nations, Cambodia faces the largest potential percentage reduction in US exports, at 23.9%. Nevertheless, Cambodia's total exports to America last year amounted to only US$12.6 billion, meaning the absolute financial impact would be less severe than Vietnam's.
Other regional nations also face varying degrees of impact: Thailand's exports to the US are projected to decline by 12.7%, Malaysia's by 10.4%, and Indonesia's by 6.4%. Singapore will be relatively less affected, with a projected 3.8% decrease, primarily because its US trade involves services or re-exports of high-tech goods where tariff rates remain unconfirmed.