In Vietnam, Factories That Boomed in Trump’s First Term Brace for 46% Tariffs
Hanoi and other cities have grown into bustling centers of commerce, but manufacturers worry about losing their biggest customer
HANOI—For Ha Pham, who runs a network of garment factories employing 500 Vietnamese workers, America has been good for business.
The U.S. accounts for most of her sales, and President Trump’s first-term tariffs on China nudged businesses to shift more production out of China and to factories such as hers. That boosted her revenue by as much as 20% annually.
So when Trump ordered a 46% tariff on Vietnamese goods, to go into effect on Wednesday, it sent her on a crash mission to find new customers in Europe and elsewhere. “The tariff itself is absurd,” said Pham, whose factories work on goods that end up at Levi’s, Target and other U.S. brands. “Americans would not benefit at all.”
Trump’s plan threatens to upend one of modern history’s great comeback stories: the rehabilitation of the U.S.-Vietnam relationship after the Vietnam War, which ended 50 years ago this month.
The U.S., little more than a footnote in Vietnam’s trade early this century, has become the country’s biggest customer, importing $137 billion in Vietnamese goods last year, according to the Census Bureau. The U.S. trade deficit with Vietnam—the basis for Trump’s tariff rate—is third only to China and Mexico.
That has helped turn Hanoi into a bustling center of global commerce. There are McDonald’s and Starbucks across the street from each other. Business bigwigs glide down modern roads in electric sport-utility vehicles, passing by digital billboards flashing ads for beer.
There are a few clues this isn’t an American city. One is the swarm of mopeds, often balancing potted plants or live chickens, puttering through red lights. Another: streets and alleys lined with the hammer-and-sickle flag of the ruling Communist Party.
It isn’t just American money that is welcome in Vietnam. Americans themselves are too. “Beloved and welcome pretty much everywhere,” said Ted Osius, a former U.S. ambassador to Vietnam who has worked in the country since the 1990s.
The hole-in-the-wall noodle shop where the late TV star Anthony Bourdain dined with President Barack Obama in 2016 commemorates the occasion by displaying the table and chairs they used behind glass, like a museum exhibit. After the trip, the Circle K convenience stores that dot Vietnamese cities began selling magnets showing Obama giving a thumbs-up to the grilled-pork dish he ate, called bun cha.
For American tourists in Vietnam, the biggest risk is making eye contact with Vietnamese teens at tourist locations like the Saigon Central Post Office. They might lose 10 minutes of time to students eager for a free lesson.
“It’s partly curiosity, partly a chance to practice English,” said David McCaskey, a University of California, Riverside student working on an environmental history Ph.D. in Vietnam.
After U.S.-China tensions flared in the first Trump administration and Trump imposed his first round of tariffs on Chinese goods, suppliers for companies like Nike and Apple doubled down on Vietnam to avoid the tariffs. Foreign businesses found Vietnamese officials to be pro-business and eager to give manufacturing projects a boost. And with Hanoi wary of China getting too powerful, Vietnam’s geopolitical stance aligned with Washington’s.
Labor is cheaper in Vietnam than in China and, since the two countries are neighbors, it is easy to truck in needed Chinese parts. Vietnam’s youthful population of about 100 million means it has more workers ready to toil at factories than most other nations—although even then, it can be hard to find enough with the right skills.
Now, Vietnam’s ballooning trade surplus with the U.S. has put it in the sights of people like Trump.
Since it opened in 2019, Christina Chen’s factory in northern Vietnam has been churning out tables and chairs—nearly all of them destined for America. She said that since Trump announced the tariffs, she has spent so much time negotiating with clients over their orders that she has developed a sore throat.
“This is something we cannot defeat even with the best product and best price,” said Chen, a Taiwanese executive whose business makes furniture from local acacia wood. Without a reprieve, she said, “everybody knows the volume is going to crash.”
After the tariffs were announced, Michel Bertsch, a Belgian national who runs a business in Vietnam making baby cribs and high chairs, met other Europeans at a reception for the Belgian royal family, who were in Vietnam on a state visit. Even the royal splendor couldn’t lighten the atmosphere.
“The mood was very worried, shocked,” Bertsch said. “Nobody expected the tariffs to be this high.”
He said he expected Americans would have to pay more for his products and demand would fall.
Factory owners say they will struggle to find other takers for their products, in part because Chinese competitors will be trying to cut deals with the same European buyers.
Vietnam’s leaders tried to put themselves in position to negotiate over the tariffs even before they were announced. When a delegation of about 60 American businesses including representatives of Amazon, Coca-Cola and Ford Motor visited the country last month, they got a rare meeting with Vietnam’s top leader, Communist Party General Secretary To Lam.
“He had some very clear messages that he wanted to convey about Vietnam’s desire to work with the private sector,” especially U.S. businesses, said Osius, the former ambassador, who led the delegation.
Vietnam also said recently that it approved a trial for Starlink, the satellite internet provider of Elon Musk, Trump’s adviser. Hanoi cut its tariffs on U.S. goods, including on cars and natural gas, and pledged to buy more American planes and agricultural products.
The moves appeared to have an initial effect. Two days after announcing the tariffs, Trump said that he had a “very productive” phone call with Lam on Friday to strike a deal.
Now, Vietnam is on tenterhooks awaiting word of progress. The nation’s deputy prime minister is flying to the U.S. on Sunday, and businesspeople are speculating what further promises Hanoi could offer Trump.
Interviewed this weekend, Hanoi-based ceramic exporters who sell decorative vases and other goods to U.S. companies including Walmart said they were confident that the 46% rate would be negotiated down. “Things will fall in place soon,” said one exporter, Thanh-Tam Pham.
At a bustling industrial park near Hanoi’s airport, Do Thi Loan had just finished her sewing shift at Vit Garment, where she earns about $310 a month. After buying a bag of oranges and guavas, she said worries about tariffs hadn’t yet hit her factory floor.
The lower labor costs are among the reasons why Pham, the garment executive, finds the American tariffs and Trump’s plans to revitalize U.S. manufacturing absurd. “If you want to switch production to America like 100%, the price would be over the top,” Pham said.