Vietnam's trade surplus with US surges, complicating tariff talks

The Star

07-06-2025

Sales staff work at an Apple shop in Hanoi, Vietnam Thursday, April 10, 2025. Vietnam is home to large manufacturing operations of US multinationals such as Apple, Intel and Nike. - AP
HANOI: Vietnam's trade surplus with the US expanded sharply in May as exports swelled and its imports from China also jumped, exacerbating sore points with Washington that could hurt Hanoi's efforts to avoid crippling tariffs.
Separate trade data from the US also showed Vietnam's surplus overtook Mexico's in April, lagging only China and the European Union.
US President Donald Trump has vowed to bring down the US trade deficit and the South-East Asian country faces one of his highest "reciprocal" tariffs at 46 per cent if a deal cannot be negotiated before a pause on the levies ends in early July.
Despite Hanoi's efforts and pledges to meet Washington's demands, the surplus keeps growing, particularly as exporters rush to get their goods to the US before the tariffs go into effect.
The new figures "may put some clouds in the sky of these negotiations and put pressure on Vietnam to make additional concessions to reach an agreement," said Leif Schneider, vice chairman of the European Chamber of Commerce in Vietnam's legal sector committee.
The surplus with the United States surged to US$12.2 billion in May, up nearly 42 per cent from a year earlier and 17 per cent higher than April, Vietnamese government data showed on Friday. Exports to the US also climbed roughly 42 per cent from a year earlier to a post-pandemic high of US$13.8 billion.
That stands in contrast to signs that other countries are reining in their exports to the United States with the US trade deficit narrowing sharply in April.
Schneider noted that while Vietnam's spike in exports was largely due to front-loading ahead of possible tariffs, and represents a short-term inflation of the surplus, Vietnam is in a particularly hard spot because of its limited imports from the United States.
In the first five months of the year, the surplus hit nearly US$50 billion, up 28.5 per cent and putting Vietnam on track to exceed last year's record surplus.
The country's imports from China also posted a post-pandemic record of US$16.2 billion in May, up 21 per cent from a year earlier.
Vietnam is home to large manufacturing operations of US multinationals such as Apple, Intel and Nike, and it also hosts numerous Chinese companies, often suppliers to US firms.
US officials have repeatedly accused Vietnam of being used as a waypoint for Chinese goods destined for the United States. They allege that some goods have "Made in Vietnam" labels despite having received no or insufficient added value in the country - allowing Chinese exporters to avoid high US duties on their goods.
The US has sent a "long" list of "tough" requests to Vietnam in its tariff negotiations, including demands that could force the country to cut its reliance on Chinese industrial goods imports, two people briefed about the matter have said.
Under US pressure, Hanoi has launched a crackdown on illegal transshipments of goods, mostly from China. It has also repeatedly shown its willingness to reduce non-tariff barriers and to import more US goods, including US planes, farm products and energy, although no purchase contracts have been announced yet.
Vietnam's overall trade figures with the world showed exports in May rose 17 per cent from a year earlier to US$39.6 billion, while imports were up 14 per cent at US$39 billion.
Separate government data also out on Friday showed industrial production in May shot up 9.4 per cent from a year earlier, while consumer prices rose 3.24 per cent and retail sales were up 10.2 per cent.
Foreign investment inflows for January-May climbed 7.9 per cent to US$8.9 billion. Foreign investment pledges over the period soared 51.2 per cent to US$18.4 billion. - Reuters