3 scenarios of Vietnam's GDP affected by the new US tax policy

The General Statistics Office said that the new US tax policy, especially the 46% reciprocal tax rate applied to goods from Vietnam, is creating major challenges for Vietnam's economic growth.

On the morning of July 5, the General Statistics Office held a press conference on the socio -economic situation in the second quarter and the first 6 months of 2025.

Referring to the impacts of the new US tax policy on the Vietnamese economy, the General Statistics Office said that the new US tax policy, especially the 46% reciprocal tax rate applied to goods from Vietnam, is creating major challenges for Vietnam's economic growth.

Key export industries such as wood, textiles, iron and steel, metal products, electronic products, computers, telephones, machinery and equipment, etc. may be seriously affected, reducing the competitiveness of Vietnamese goods in the US market. This greatly affects the production of these products and negatively impacts Vietnam's economic growth.

Source: General Statistics Office

According to the General Statistics Office, if the US imposes an average tax of 10.0% on Vietnam's export goods, it will have almost no impact on export turnover to the US market and will not impact economic growth;

If the US imposes an average tax of 15% on Vietnam's export goods, it will reduce the value of exports to the US by 6-7.2 billion USD (reduce about 5-6% of export turnover). The impact of GDP reduction is about 0.4-0.5 percentage points.

If the US imposes an average tax of 20% on Vietnam's export goods, it will reduce the value of exports to the US by 11-12 billion USD (reduce about 9-10% of export turnover). The impact of GDP reduction is about 0.7-0.8 percentage points.

The General Statistics Office said that the impact assessment scenario is based on the assumption that the elasticity coefficient is in the range of 1-1.2%; however, it is possible that the proportion of export items to the US with high demand or cheaper alternatives in other competitive markets will have a different elasticity coefficient. Next, there are no tight constraints on the conditions of export and import goods between Vietnam and China (regarding the origin of raw materials, transit goods) and the assumption is that there is no impact on increasing or expanding export markets and promoting existing FTAs.

Need to diversify export markets, promote exploitation of domestic market

Trade relations between the US and Vietnam have grown strongly in recent years. Currently, the US is one of Vietnam's leading trade partners, with Vietnam's exports to the US in 2024 accounting for about 29.5% of the country's total export turnover, with a value of 119.5 billion USD.

The main export items include computers, electronic products, components, machinery, equipment, textiles and wood. Specifically, some items account for a large proportion of the total export turnover to the US such as: Computers, electronic products and components account for 19.4%; Other machinery, equipment, tools and spare parts account for 18.5%; Textiles account for 13.5%; Telephones of all kinds and components account for 8.2%; Wood and wood products account for 7.6%; and footwear 6.9%; ….

Source: General Statistics Office

Furthermore, Vietnam is the 8th largest trading partner of the US, accounting for about 4.0% of total US exports. Vietnam's trade surplus with the US is 104.4 billion USD. The proportion of Vietnam's exports to the US has tended to increase in recent years.

From that, the General Statistics Office assessed that the US tax policy has a profound impact on Vietnam's GDP growth through trade, investment and financial channels. To cope with the fluctuations from changes in US tax policy, Vietnam needs to have measures to encourage investment, diversify export markets, exploit the domestic market and improve the business environment. This not only helps to minimize negative impacts but also creates favorable conditions for restructuring the economy towards enhancing internal strength and sustainable growth.

Source: https://phunuvietnam.vn/3-kich-ban-gdp-viet-nam-anh-huong-tu-chinh-sach-thue-moi-cua-my-20250705123210788.htm