Vietnam has been benefiting from the shift in supply chains as countries consider markets other than China to outsource their manufacturing activities amid rising trade tensions between the United States and China.
However, the Southeast Asian country’s rising role in global trade is facing new hurdles. In 2024, its trade surplus with the US exceeded US$110 billion, up 18% from the previous year, driven by strong exports and a weaker currency. This placed Vietnam fourth in trade surpluses with the US, after China, the European Union, and Mexico.
Some experts believe that Vietnam’s export-reliant economy could face significant tariff risks under the incoming US administration.
In a recent conversation with The Asset, Thu Nguyen, head of investments at the Ho Chi Minh-based asset manager VinaCapital, notes that the prospect of heightened tariffs being flagged by President-elect Donald Trump has already impacted the country’s financial markets.
“Towards the end of 2024, significant capital outflows were observed as investors feared potential economic repercussions stemming from Vietnam’s trade imbalance with the US,” she says.
However, Thu Nguyen downplays the risk of any severe trade disruption, saying that Trump’s approach to tariffs historically serves more as a negotiation tool rather than a long-term punitive measure. “At the end of the day, he’s a businessman,” she explains, referencing Trump’s use of tariffs as leverage during his first term.
From her perspective, the likelihood of sustained high tariffs on Vietnam remains low, given the country’s strategic importance as an alternative manufacturing hub to China.
Vietnam’s diplomatic strategy, referred to by Thu Nguyen as “bamboo diplomacy”, also plays a role in mitigating potential fallout from US trade policies. She highlights that Vietnam has maintained a careful balance in its relations with both China and the US, positioning itself as a viable partner for American firms seeking to diversify their supply chains away from China without incurring the same geopolitical risks.
“When Trump wants to exert influence over China, he needs other countries to source goods from without driving up inflation in the US,” she notes, underscoring Vietnam’s advantageous position as a low-cost producer with close proximity to Chinese supply chains.
Boosting aircraft, LNG imports
To address its trade surplus with the US and reduce the risk of tariffs, she suggests that Vietnam increase imports from the US in key sectors. Specifically, she notes that Vietnam Airlines and VietJet Air are well-positioned to purchase aircraft from manufacturers such as Boeing. Both airlines are in the process of expanding their fleets to meet rising demand, driven by a strong post-pandemic recovery in both domestic and international air travel.
Additionally, she says, liquefied natural gas ( LNG ) imports from the US could provide another avenue for balancing trade. Vietnam’s Power Development Plan VIII ( PDP8 ) outlines a significant shift towards renewable energy and LNG-fired power plants as the country phases out coal.
VinaCapital itself is involved in the development of an LNG power plant in partnership with South Korea’s GS Energy, with plans to source a portion of its LNG from US suppliers. By strategically increasing imports in these high-value sectors, Thu Nguyen believes Vietnam can negotiate its way out of any major trade penalties while continuing to benefit from strong export-driven growth.
Ultimately, unlike larger economies such as China, Vietnam is less likely to be perceived as a major threat by the US and could use its smaller scale to negotiate favourable outcomes.
As she puts it, “Trump will likely maintain a hard stance on China, but Vietnam is not a major risk to him. If anything, he can benefit from maintaining good relations with Vietnam.”
Sectors with bright prospects
On the domestic scene, Thu Nguyen says prospects of Vietnam’s clean energy push are promising, driven by its long-term energy goals. Under PDP8, Vietnam aims to have renewable energy account for 50% of its power generation by 2050, while gradually phasing out coal-fired power plants. Offshore wind, particularly along Vietnam’s long coastline, presents substantial growth opportunities. Although Chinese and European firms currently dominate the renewable energy sector, US companies may yet gain ground.
Thu Nguyen is also bullish on the country’s retail sector, specifically consumer discretionary companies. As domestic consumption grows and international tourism recovers, leading retailers like Mobile World and Phu Nhuan Jewelry are well-positioned to benefit.
Mobile World, which has successfully expanded from mobile phone retailing into grocery and electronics, exemplifies the sector’s potential. VinaCapital’s investment chief expects retail companies’ profits to grow by 38% in 2025.
The banking sector is also set to deliver robust growth, with earnings forecast to rise 17% this year, compared to 14% in 2024. Given the country’s relatively underdeveloped capital markets, Vietnamese banks play a crucial role in economic development. The government’s target to increase banking penetration from the current 45% to 80% by 2030 presents a significant growth driver, says Thu Nguyen.
VinaCapital favours established players such as Military Bank ( MBB ), Asia Commercial Bank ( ACB ), and Vietcombank, citing their solid asset quality and expansion potential. Digitalization is another key focus, with several digital-only banks already operating in the country.
Real estate opportunities
Unlike many of its neighbours, Vietnam’s real estate market faces a unique set of challenges and opportunities. Despite the real estate scandal in 2022, which slowed project approvals, the sector holds significant potential for long-term growth.
Housing demand remains high, driven by a population of nearly 100 million and a cultural preference for home ownership. VinaCapital expects a rebound in the sector in 2025 as regulatory reforms aimed at streamlining project approvals take effect.
Compared to regional peers, Vietnam is underbuilt, meaning there is substantial room for real estate expansion, especially in modern housing.
However, mortgage penetration remains low in view of cultural factors and lower income levels. As the economy modernizes and banking penetration deepens, VinaCapital anticipates a robust rise in home financing, which will further support real estate sector growth.