The United States’ (US’)
sweeping trade tariffs on about 90 nations has reignited debate around economic resilience and the strategic role of diplomacy in shaping future growth. Vietnam finds itself at the crossroads of both risk and opportunity — especially in the digital domain.
For Vietnam, the challenge lies in weathering potential fallout while positioning itself as a leading export-oriented economy in Southeast Asia. Below, economist
Professor Vu Minh Khuong — Practice Professor at the Lee Kuan Yew School of Public Policy, National University of Singapore — outlines three possible trade scenarios and what they could mean for Vietnam’s economic development strategy. He also explains how smart, proactive negotiations with the US could catalyse lasting transformation.
How would the tariffs affect Vietnam’s economic development prospects?
To assess the impact of the recent US tariff shockwave on Vietnam's economy, it’s helpful to consider three potential global scenarios:
Most countries make substantial concessions to the US — including agreeing to zero tariffs, drastically removing non-tariff barriers, and committing to increased purchases of US goods. In return, the Trump administration responds constructively, engaging in collaborative efforts to reduce bilateral trade imbalances.
Impact: Global economic stability is preserved, and Vietnam continues to deepen international integration while leveraging the momentum to accelerate domestic economic reforms.
- Scenario 2: Trade war escalation
Trade wars erupt between the US and its major partners, disrupting global supply chains and stalling economic growth.
Impact: While Vietnam may face short-term uncertainty, it could benefit from increased supply chain diversification and a surge of interest from global firms seeking alternatives to China — particularly in digital services, high-tech manufacturing, and infrastructure.
- Scenario 3: Global retaliation
If the US recklessly overplays its leverage and provokes a unified global response — such as a coordinated export freeze by most countries — both US consumers and global trade would suffer severe disruption. In this scenario, the consequences would fall most heavily on the US: the government would collect no tariff revenues, while consumers would face acute shortages, even of essential goods for daily life.
Impact: Despite global stagnation, such a crisis could act as a powerful wake-up call. For Vietnam, it could spark a new wave of deep structural reforms in governance, regulatory frameworks, and service-sector liberalisation — driven by a profound sense of survival and strategic urgency.
Across all three scenarios, Vietnam is likely to emerge stronger — particularly in high-value-added activities and the digital economy. Heightened global uncertainty may act as a catalyst for both the government and the private sector to accelerate structural reforms and digital transformation. This momentum is expected to drive robust investment in digital and green infrastructure, foster innovation, and strengthen regulatory frameworks to support long-term, sustainable growth.
What would Vietnam’s negotiation with the US mean for its economic future?
Vietnam is actively engaging in negotiations with the US, aiming for
Scenario 1 — a constructive, concession-based outcome. If successful, it would help create a more stable and favourable investment climate, particularly for major US firms such as
Qualcomm,
Nvidia,
Intel,
Meta,
Amazon,
Google, and
Boeing.
A successful outcome could:
- Encourage greater US tech investment and strategic partnerships in Vietnam.
- Foster a more open and dynamic digital ecosystem, enabling startups and consumers in both countries to engage more robustly.
- Strengthen Vietnam’s position as a regional hub for digital services, leveraging its young, tech-savvy population and rapidly expanding infrastructure. This would accelerate the country’s shift toward high-value digital services exports.
In short, effective diplomacy with the US could unlock a new era of economic growth for Vietnam — positioning the country as a key player in high-value regional supply chains and as a leading exporter of digital and service-based industries.