Vietnam’s economy grew at a slightly slower pace in the first quarter, government figures showed Sunday, as the Southeast Asian country braces for the impact of colossal tariffs imposed by Washington.
The manufacturing powerhouse counted the United States as its biggest export market in the first three months of the year, but the key customer has now slapped it with a thumping 46 percent tariff.
The move is part of a furious new global trade blitz announced Wednesday by President Donald Trump that has sent markets around the world into a tailspin.
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, the General Statistics Office said Sunday.
Despite the challenge presented by US levies, Vietnamese Prime Minister Pham Minh Chinh said a target of “at least eight 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 in the remaining quarters the economy will need to grow between 8.2 and 8.4 percent, the government said.
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 added 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 order decreases 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.
The country’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.
Meanwhile, 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”.
