When Can Van Luc, a member of the Prime Minister’s Policy Advisory Council, presented data on Vietnam’s key trade partners for the first seven months of 2025, representatives from numerous businesses in the audience quickly pulled out their phones to capture the figures.

Luc’s data revealed that the proportion of domestic enterprises in several export sectors to the US is small. For example, domestic footwear companies just account for 16.71 percent, toys and sports equipment 9.84 percent, electronics and components 9.63 percent, and machinery and equipment 6.15 percent.

Luc emphasized that Vietnam’s growth model has long relied on exports, but the concept of “transshipment tariffs” would be a wake-up call for the business community and an opportunity for restructuring. 

Businesses need to increase the localization rate in their export products. Domestic enterprises, particularly those in supporting industries, must grow stronger in the coming period.

According to Nguyen Ngoc Hoa, Chair of the HCM City Union of Business Associations (HUBA), increasing domestic content in products can help gain two goals. First, it mitigates the risk of higher transshipment tariffs from the US in the future. Second, it creates jobs and real production value for the economy.

What qualifies as “transshipped goods”?

Addressing this concern, Luc advised businesses to remain calm. The 40 percent transshipment tariff applies globally, not just to Vietnam. Moreover, even the US authorities are struggling due to the lack of specific evaluation criteria.

According to the World Trade Organization, goods with a domestic production rate of 30-37 percent are considered products of a country. However, Luc noted that the US has yet to clarify its regulations.

Thus, he recommended that the Vietnamese government stay composed. Vietnam should not rush to establish specific criteria, but instead should wait for the US to issue its criteria, then negotiate accordingly.

“We also urge Vietnamese businesses to aim for over 50 percent domestic production to ensure safety,” he advised.

Regarding the 20 percent reciprocal tariff imposed by the US on Vietnamese goods, Phung Quoc Man, Chair of the HCM City Handicraft and Wood Industry Association, said that many companies are considering setting up production facilities in a third country or even in the US to ease tariff pressures.

Wood industry businesses with revenues ranging from $50 million to $300 million are exploring the creation of “Made in USA” products organized by Vietnamese producers in the US.

Luc noted that Vietnamese wooden products are favored in the US for their craftsmanship and distinct wood quality compared to products from China and other countries.

Tran Chung