Vietnam's GDP Faces Hit Amid New U.S. Tariffs, Analysts Warn

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Vietnam is expected to face a GDP contraction of between 1% and 5.5% due to new U.S. tariffs. The country relies heavily on trade with the U.S., and a 46% tariff specifically targeted at Vietnam poses significant challenges to its economy. The U.S. announced a 10% general tariff increase and harsher measures on countries with notable trade surpluses with the U.S., including Vietnam with a trade deficit exceeding $123 billion.

Economists, like Niven Winchester from Auckland University of Technology, predict Vietnam's GDP could shrink by about 0.99%, translating to a $196 loss per household. Alongside other countries like Mexico and China, Vietnam's economy is vulnerable given its high export dependency on the U.S.

As the tariffs ripple through global markets, Vietnam has deemed them "unfair," highlighting its lower average tariff on U.S. goods. The Vietnamese dong's recent plunge points to sustained currency pressures. In response, ING forecasts the tariffs could make Vietnam Asia's hardest-hit country economically.

Economists recommend Vietnam pursue market diversification to bolster resilience. Professor Phillip Harms of Johannes Gutenberg University Mainz suggests the established EU-Vietnam Free Trade Agreement (EVFTA) might help offset the tariff impacts. Vietnam exported $52.1 billion to Europe last year, with potential to widen this market.

Vietnam must broaden exports beyond the U.S., echoing Nguyen Chi Hai from Vietnam National University. A concerted effort by regulators and businesses is vital to explore new markets.

Experts urge negotiation over confrontation with the U.S., highlighting Vietnam's positive bilateral relations as advantageous. Meanwhile, the government is preparing to engage in dialogue with U.S. counterparts to address and potentially mitigate tariff impacts. Expanding further concessions on certain imports might form part of Vietnam's negotiation strategy, as the country seeks a mutually beneficial resolution, reported VN Express.