Is “Zero” Tariff Practical in US–Vietnam Trade? How to have right negotiation.

The U.S. has imposed a 46% tariff on Vietnam under a reciprocal tariff approach, while Vietnam has proposed zero tariffs from both sides. However, focusing only on tariff symmetry overlooks the real issue—trade imbalance. This article outlines the current facts and possible directions for negotiation.

Please read my article, US Tariff and Impact on countries and Supply chain disruption

U.S. Imports from Vietnam

Total value: $136.6 billion (↑ 19.3% from 2023)

Top imports by category:

• Electrical machinery and equipment (HS Code 85): $41.78 billion
• Machinery including computers: $17.51 billion
• Furniture and bedding: $11.97 billion
• Footwear: $7.94 billion
• Knit apparel: $7.87 billion

U.S. Exports to Vietnam

Total value: $13.1 billion (↑ 32.9% from 2023)

Top exports by category:

• Electrical machinery and equipment: $1.71 billion
• Cotton: $751.28 million
• Plastics and articles thereof: $659.34 million
• Prepared animal fodder: $638 million
• Inorganic chemicals: $575.87 million

HS Code 85 – Key Export Segment

Vietnam’s exports under HS Code 85 totaled $41.78 billion. This includes:

• HS Code 8517: Mobile phones and communication devices
• HS Code 8542: Semiconductors and integrated circuits
• HS Code 8544: Insulated wires and cables
• HS Code 8541: Discrete semiconductors
• HS Code 8525: Broadcasting and transmission apparatus

Major Exporters under HS Code 85

Samsung Electronics

• Largest exporter globally under this HS Code
• Vietnam exports via Samsung exceed $60 billion annually

LG Electronics

• Produces a range of electronics and appliances in Vietnam

Intel Corporation

• Major U.S.-based chip manufacturer with advanced facilities in Vietnam

Apple Inc.

• iPad assembly operations managed via Vietnamese suppliers

Samsung, LG, and Intel lead in exports under this category. Intel and Apple are U.S.-based, which influences how trade policies should be negotiated.

Next step: Replicate this HS code visibility across other high-value imports.

Discussion Points for Negotiation

1. Analyze Imports HS Code-Wise: Understand which HS codes dominate exports and who manufactures them.
2. Segment by Country of Origin: Top manufacturers in Vietnam under HS Code 85 are not Chinese.
3. U.S. Firms in Vietnam: Intel and Apple should be supported to repatriate production, if aligned with U.S. goals.
4. Global Firms Like Samsung and LG: As they export globally, the U.S. may encourage them to diversify away from the U.S. market.

Tariff Should Be HS Code Specific

Flat 46% across all imports is ineffective. Instead:

• HS Code 8517: 20%
• HS Code 8541 & 8542 (semiconductors, chips): 10%, until domestic fabs (e.g., TCMC, ASML-driven) are functional
• HS Code 8525: 25%

This segmented approach will create fair leverage while encouraging domestic manufacturing.

Note: Vietnam’s imports from the U.S. have risen by 39.8% over the last two years. Focus should be on increasing to reduce trade imbalance.

Strategic Steps Forward

• Tax Incentives for Factory Relocation: Revise corporate taxes to attract Intel, Apple, Samsung, and LG to build facilities in the U.S.
• Expand U.S. Export Opportunities: Identify additional categories for Vietnam to increase imports from the U.S.
• Create Vietnam Trade Desk: Establish a dedicated team in the U.S. Trade Ministry to manage Vietnam-specific trade policy and engagement. Focus on reducing trade imbalance.

Vietnam's Manufacturing Strengths

• Low Labor Costs: Competitive vs. regional peers.
• Strategic Location: Proximity to China, Japan, South Korea—great for logistics and trade.
• Skilled Workforce: Young, tech-savvy labor due to strong investment in training.
• FDI-Friendly Policies: Incentives and reforms to attract foreign manufacturing investment.
• Modern Infrastructure: Ports, roads, and industrial zones are expanding rapidly.
• FTA Participation: Multiple free trade agreements provide global market access.
• Industrial Clusters: Strong ecosystem of suppliers, services, and innovation hubs.
• Economies of Scale: After China, only Vietnam and Indonesia offer comparable scalability in Asia.