Vietnam Economy Targets 10% Growth as Transshipment Risks Looms
- Vietnam's trade surplus with the US hit $121.6 billion in the first 11 months of 2025 which defies efforts to balance the trade relationship
- A 20 percent tariff is currently in place but negotiations are ongoing to define "transshipped" goods which could face a stricter 40 percent levy.
- The Vietnamese government is targeting ambitious 10 percent annual growth while relying heavily on raw material imports from China to fuel its export engine.
Vietnam is proving to be an unstoppable force in global trade. The Southeast Asian nation is on track to smash its own record for trade surplus with the United States. This is happening despite aggressive efforts by Washington to close the gap. Negotiators have been working for months to finalize a deal that would balance the scales. The data shows that American consumers are still addicted to Vietnamese goods.
The numbers for the first eleven months of 2025 are staggering. Vietnam posted a trade surplus with the US of $121.6 billion. This represents a jump of 27.5 percent compared to the previous year. The country ships a massive volume of products across the Pacific. This includes everything from Nike sneakers and furniture to complex electronics. The demand has not slowed down.
This widening gap is a major political headache. The US was Vietnam's largest export market last year. The trade imbalance was the third largest in the world. It trailed only China and Mexico. American officials want this number to go down. Vietnam has repeatedly promised to buy more "big ticket" American items. This usually means aircraft or energy equipment or agricultural products.
Negotiators are currently hammering out the final terms of a new trade agreement. Another round of high stakes talks is scheduled to take place in the US in the coming days. The pressure is on to find a solution that satisfies the White House without crippling Vietnam’s economy. The diplomatic relationship is tight but the economic numbers are lopsided.
There was a slight cooling in November. The trade surplus narrowed for the third straight month. The gap was reported at $1.09 billion for the month. This was significantly lower than the $2.6 billion seen in October. It also missed the median estimate from Bloomberg analysts. Exports jumped by 15.1 percent to $39.1 billion. This sounds good but it was slower than the 18 percent growth economists expected.
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| Photo by Tron Le on Unsplash |
Imports into Vietnam are also rising. They jumped 16 percent to $38 billion in November. This figure is revealing. The majority of these imports are raw materials and equipment. Vietnam acts as a massive assembly floor. They import parts and turn them into finished goods for export. China remains the biggest supplier for these inputs. Vietnam bought nearly $168 billion worth of goods from its northern neighbor in November alone.
The tariff situation remains fluid and complex. President Donald Trump initially threatened a punishing 46 percent tariff on Vietnamese goods. That number was negotiated down to 20 percent in July. This was the first major trade deal announced in the region. However Vietnam still pays a higher rate than its neighbors. Indonesia and Thailand and Malaysia face a tariff of only 19 percent.
The White House announced a broad framework in October to ease tensions. Vietnam agreed to provide preferential market access for US industrial and agricultural exports. In return the US offered zero tariffs on selected products. But the devil is in the details. Crucial specifics are still being debated behind closed doors.
The biggest sticking point is the issue of "transshipment." The US is determined to stop Chinese companies from cheating the system. Some Chinese firms ship goods to Vietnam and slap a "Made in Vietnam" label on them to avoid US levies. Washington wants a strict definition of what counts as a Vietnamese product. Goods deemed to be transshipped face a massive 40 percent tariff.
Vietnam’s government is incredibly ambitious about the future. They are targeting annual economic growth of at least 10 percent for the next five years. This is a bold goal given the global uncertainty. The economy grew at a blistering 8.2 percent last quarter. That was the fastest pace in three years. Factories were running overtime to ship goods before the new tariffs took effect.
International observers are more cautious. The Organisation for Economic Co operation and Development (OECD) sees a different picture. They project growth of around 6.2 percent next year. They believe weaker global demand will eventually restrain exports. The resilience of Vietnam's manufacturing sector has shocked experts this year. The question is whether they can keep defying gravity as the trade war heats up.