Latest news with #Vietnamese-produced
The Star
08-07-2025
- Business
- The Star
Vietnam State Bank readies measures to counter tariff impact
HANOI: Vietnam's central bank stands ready to take steps to curb inflation and support growth, as it warns about the impact of higher US tariffs on the economy and its currency. Risks in global markets are "putting pressure on the management of monetary policies, exchange rates, and interest rates domestically, as well as on our efforts to achieve the 2025 economic growth target of eight per cent or higher,' State Bank of Vietnam Deputy Governor Pham Thanh Ha said at a briefing in Hanoi Tuesday (July 8). The central bank will continue to manage the dong in a flexible manner and use monetary policy tools to keep the FX market stable, to help boost the economy and control inflation, Ha added. After announcing a deal that will see a 20 per cent tariff on Vietnamese-produced goods and 40 per cent on those trans-shipped from elsewhere last week, US President Donald Trump stepped up his trade offensive Monday, unveiling letters threatening higher tariffs on a range of key trading partners. Vietnam said last week that negotiators are still working to finalise the details of the deal, providing little clarity to businesses and investors beyond the tariff rates disclosed so far. The South-East Asian nation saw growth accelerate in the second quarter as foreign buyers racing to get ahead of the threatened tariffs boosted Vietnam's exports. Still, Prime Minister Pham Minh Chinh cautioned last week that the economy "continues to face significant limitations, difficulties and challenges.' Vietnam's decision to maintain "low interest rates to support lending and economic growth requires some trade-offs,' and one of those trade-offs is the weaker dong, said Pham Chi Quang, head of the central bank's department for monetary policy, also speaking at the briefing. Trump's tariff letters "will have a significant impact on global supply chains, affect capital flows and influence FDI around the world,' as investors weigh the differing tariff levels, therefore, it will have a major impact on the currency, Quang said. The Vietnamese dong has been under pressure in recent weeks, hovering near a record low. Given the global slowdown, a weaker currency could help make Vietnamese goods more competitive as tariff pressure persists. The dong was little changed at 26,121 per dollar as of 11:31 a.m. after the briefing. The daily reference rate had been set at a record-low 25,121 per dollar Tuesday, the weakest since at least 2005, according to data compiled by Bloomberg. The dong is allowed to trade as much as five per cent on either side of the reference rate. - Bloomberg
Business Times
08-07-2025
- Business
- Business Times
Vietnam central bank readies measures to counter tariff impact
[HANOI] Vietnam's central bank stands ready to take steps to curb inflation and support growth, as it warns about the impact of higher US tariffs on the economy and its currency. Risks in global markets are 'putting pressure on the management of monetary policy, exchange rates, and interest rates domestically, as well as on our efforts to achieve the 2025 economic growth target of 8 per cent or higher,' State Bank of Vietnam deputy governor Pham Thanh Ha said at a briefing in Hanoi on Tuesday (Jul 8). The central bank will continue to manage the dong in a flexible manner and use monetary policy tools to keep the FX market stable, to help boost the economy and control inflation, Ha added. After announcing a deal that will see a 20 per cent tariff on Vietnamese-produced goods and 40 per cent on those trans-shipped from elsewhere last week, US President Donald Trump stepped up his trade offensive on Monday, unveiling letters threatening higher tariffs on a range of key trading partners. Vietnam said last week that negotiators are still working to finalise the details of the deal, providing little clarity to businesses and investors beyond the tariff rates disclosed so far. The South-east Asian nation saw growth accelerate in the second quarter as foreign buyers raced to get ahead of the threatened tariffs boosted Vietnam's exports. Still, Prime Minister Pham Minh Chinh cautioned last week that the economy 'continues to face significant limitations, difficulties and challenges.' He said Vietnam must diversify markets and supply chains to adapt to the new US policy. Vietnam's decision to keep 'interest rates at a low level to help businesses and boost growth has made the dong less attractive to hold' and has put pressure on the currency, according to Pham Chi Quang, head of the central bank's department for monetary policy, also speaking at the briefing. The Vietnamese dong has been under pressure in recent weeks, dropping to a record low in June. Given the global slowdown, a weaker currency could help make Vietnamese goods more competitive as tariff pressure persists. BLOOMBERG
Mint
04-07-2025
- Business
- Mint
Trade Deal Leaves Vietnam With Questions and One Big Challenge
(Bloomberg) -- With the dust far from having settled on this week's US-Vietnam trade agreement, one thing is clear: companies operating in what's become one of the most vibrant Asian economies are on notice to move up the value chain. A key element of the deal first unveiled by US President Donald Trump is a differentiated tariff setting, with a 20% American surtax on Vietnamese-produced goods and a 40% levy on those trans-shipped from elsewhere through Vietnam. That's largely aimed at China, which produces many of the inputs companies operating in its southern neighbor use for assembling their products. 'It will be quite difficult for Vietnam,' Do Thi Thuy Huong, an executive board member of the country's main electronics association, said of the new tariff schedule. 'But it is a motivation for the country's economy — especially for the manufacturing sector, to develop more in an actual and substantial manner' and boost localization, she said. After many disappointments, Vietnam emerged about a decade ago as a rapid-growth, export-led economy, with America as a prime customer. In recent years, policymakers in Washington actively encouraged the nation to take a bigger role in US supply chains, as a counter to China, its geostrategic rival. Trump's first trade war with Beijing saw Chinese businesses rush to relocate across the border. Then came Trump's April 2 bombshell: a 46% 'reciprocal' tariff on Vietnam that shocked the nation of 101 million people. After the US president put that on pause for three months, Vietnamese negotiators rushed to reach a deal. While the new 20% and 40% levies leave Vietnamese exports with much higher barriers than before April, the country now stands out for sealing only the third arrangement yet that Trump has announced with any trading partner. 'Everyone right now is looking at Vietnam,' said Bernardo Bautista, country manager of the logistics and shipping company DHL Vietnam. 'Every day the news is changing, but what I can tell you is that the last three months have been very eventful for us — talking to a lot of customers' about diversifying their supply chains, he said. Ho Chi Minh City-based Bautista added that companies had put expansion plans on pause, awaiting certainty on the trade rules, 'but so far it has been a very positive view.' Questions abound. Vietnam said Thursday its trade negotiators were still working with their US counterparts to finalize the details of the agreement. Treasury Secretary Scott Bessent said his understanding was a deal had been 'finalized in principle.' 'It's important to stay calm and wait for more details,' said Ngo Sy Hoai, general secretary of the Vietnam Timber and Forest Product Association. Hoai noted that, besides the reciprocal tariffs on individual trading partners, Trump has been pursuing sectoral ones, and it's important to watch whether Vietnamese wood products will be affected. A 20% levy would leave Vietnam sitting between the 10% rate secured by the UK and the current 30% rate China faces — though Chinese goods remain affected by the separate slew of increases in tariffs imposed by Trump in his first term, which were added to by former President Joe Biden. Economists and business representatives said it will be also crucial to monitor what rates Vietnam's competitors get. Duong Thi Ngoc Dung, vice chairwoman of Vietnam's Textile & Apparel Association, said she's on the lookout for what countries like India, Thailand, Indonesia, Cambodia, Sri Lanka and Bangladesh end up with. 'If Vietnam faces a 20% tariff while other countries only get 10–15%, it will put significant pressure on us and make it harder for Vietnamese products to stay competitive,' she said. The Southeast Asian nation has seen its sales to US markets surge in recent years, and it has become a major supplier of textiles and sportswear for companies such as Nike Inc. and Lululemon Athletica Inc. Across industries, companies' margins will be under pressure. The new levy will 'hurt our business as customers will ask us to share it with them,' said Paul Yang, vice president of Yang Cheng Wooden Industries International, which makes indoor wood furnishings for the likes of Williams-Sonoma, Inc. and Crate & Barrel Holdings Inc. 'Right now I am still waiting to hear from our customers.' Much of its exports to the US are made up of items like Airpods, phones or other products assembled with Chinese components and then shipped on. Vietnam is a significant hub for both Apple Inc. and Samsung Electronics Co., with numerous suppliers establishing a presence there including key players like Foxconn, GoerTek Inc, and Luxshare Precision Industry Co. 'This deal will affect Vietnam's manufacturing for the short term,' said Huong at the Vietnam Electronics Industries Association. 'But for the long term, the economy will be more healthy.' The degree of certainty provided by the deal, and Hanoi's demonstration of its determination to strike an agreement with its No. 1 export market, is also a positive, said Trinh Nguyen, a senior economist at Natixis. 'It means that Vietnam will continue to attract foreign direct investment, as it remains an attractive place to do business,' she said. Pham Luu Hung, chief economist at SSI Securities, said the government is now likely to introduce targeted support measures, ranging from tax incentives and reductions in land-lease costs to direct financial assistance for investments in high-tech industries. That, along with potentially delayed implementation of the higher tariffs, may limit the hit to gross domestic product to around 1% in 2025, Hung said. The International Monetary Fund in April projected GDP gains exceeding 5% for the coming five years in Vietnam. How actual growth pans out may depend on how its companies respond to the altered trade landscape. As Tran Phuoc Anh, Vietnam's ambassador to Singapore, recently put it, 'Vietnam understands, in this global race for capital, talent, and technology, we cannot afford complacency.' --With assistance from Rthvika Suvarna and Malcolm Scott. More stories like this are available on
