Vietnam seeks US tariff delay as Q1 economic growth slows
A street vendor pushes a bicycle carrying flowers in Hanoi on December 27, 2023. Vietnam’s Q1 GDP growth eased to 6.93%, from 7.55% in Q4 2024. (Photo by Nhac NGUYEN / AFP)
HANOI, Vietnam — Vietnam has asked for a last-minute delay to colossal tariffs imposed by Washington as government figures showed on Sunday that its economy grew at a slightly slower pace in the first quarter.
The Southeast Asian manufacturing powerhouse counted the United States as its biggest export market in the first three months of the year but its key customer has now hit it with a thumping 46 percent tariff.
The move is part of a furious new global trade blitz announced Wednesday by US President Donald Trump that has sent markets around the world into a tailspin.
READ: Explainer: Key details on Trump’s market-shaking tariffs
However, top leader To Lam has asked Trump for a delay of at least 45 days to the new 46 percent tariff, according to a copy of a formal letter seen by AFP.
In the letter, Lam said he had appointed Deputy Prime Minister Ho Duc Phoc to serve as the primary contact with the US side on the issue, “with the aim of reaching an agreement as soon as possible”.
He also said he hoped to meet Trump in Washington at the end of May to finalize the matter.
Trump said on Friday he had had “a very productive” call with Lam, who he said wanted to make a deal on tariffs.
READ: Vietnam slashes duties on range of imports to head off US tariffs
Gross domestic product in Vietnam during the first quarter grew 6.93 percent year-on-year, down slightly from the 7.55 expansion in the final quarter of last year, Vietnam’s General Statistics Office said Sunday.
Despite the challenge presented by US levies, Vietnamese Prime Minister Pham Minh Chinh said a target of “at least 8 percent” growth this year remains unchanged, the government’s official news portal said.
To achieve its goal, Vietnam’s Ministry of Finance has determined that the economy will need to grow between 8.2 and 8.4 percent in the remaining quarters, the government said.
‘Significant damage’
The US tariffs threaten to “significantly damage” Vietnam’s current growth model, which relies heavily on exports to the United States, said Sayaka Shiba, senior country risk analyst at research firm BMI.
She said that, in the worst-case scenario, Vietnam could suffer a three-percent hit to GDP this year.
Trump has claimed the Communist country charges the United States a 90 percent tariff, a figure based on Vietnam’s trade surplus with the United States, worth $123.5 billion last year.
Experts believe the new tariffs will hit hardest in sectors such as seafood, garments, footwear, wood, electronics and smartphones.
Major US corporations with manufacturing operations in Vietnam, including Nike and Adidas, are likely to see orders decrease and reductions in revenue, potentially leading to factory downsizing and job losses, Pham Van Dai, a lecturer in economics at Fulbright University Vietnam, told AFP.
Vietnam’s exports rose 10.6 percent year-on-year in the first quarter, official data showed, increasing significantly from 7.9 percent growth in the final quarter of 2024.
Industrial production was up 7.8 percent year-on-year, slowing from an 11.5 percent expansion in the previous quarter.
Experts believe investors are still holding a “wait and see” mentality amid the uncertainty caused by Trump’s tariffs.
“Now is the worst time for investors to make long-term decisions,” said Dai, adding that they are waiting for “clearer policies from the United States and (other) countries’ responses”.
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