US tariffs to present substantial hurdles to Vietnam

While maintaining a positive outlook for Vietnam this year and the next, the most recent Asian Development Outlook highlights potential risks, which were finalised before the announcement of US tariff measures.

Vietnam’s economy is forecast to grow at 6.6 per cent and 6.5 per cent in 2025 and 2026, respectively, following a robust 7.1 per cent growth last year, according to the Asian Development Bank (ADB)’s flagship annual economic publication released on April 9.

"Strong trade, a recovery in export manufacturing, and robust foreign direct investment fuelled Vietnam’s economic growth in 2024," said ADB country director for Vietnam Shantanu Chakraborty. "However, recent US announcements on tariffs, along with other continued global uncertainties, could pose significant challenges to the country’s growth this year."

The evolving global economic environment, significantly affected by geopolitical tensions and the recent tariff-related announcements by the US, is posing significant challenges for economies dependent on export-driven manufacturing. External uncertainties–such as tariff escalations, reciprocal measures, the prolonged war in Ukraine, and ongoing instability in the Middle East–could constrain near-to medium-term global economic growth. Moreover, a slowdown in the US and China, Vietnam’s major trading partners, could further affect economic prospects.

"The government of Vietnam has initiated an ambitious plan to boost growth, which can help mitigate the significant external risks," said Chakraborty. "Higher and sustainable economic growth is possible if ongoing, extensive institutional reforms are implemented swiftly and efficiently. Such reforms would stimulate domestic demand, increase governance efficiency in the near term, and consequently encourage private sector development over the medium and long term."

Enhancing Vietnam's participation in global supply chains is a critical policy challenge for the country's development.

Thanh Van

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