June 2024: The imposition of new tariffs by major trading partners has sparked immediate consequences across Vietnam's export-driven seafood and textile industries. These sectors, foundational to the country’s economic growth and global export footprint, now face significant hurdles as the international trade landscape shifts.
In the latest move to address trade deficits and domestic industry concerns, several countries—most notably the US and the European Union—have raised tariffs on Vietnamese imports. While the textile and seafood sectors have enjoyed explosive growth in the past decade, they are particularly vulnerable to such protectionist measures. According to figures compiled by Business Insights, in 2023, Vietnam’s seafood (particularly shrimp and pangasius) and textiles accounted for nearly 28% of its total export value, underlining their vital importance to the national economy.
Vietnamese seafood exports, valued at around $10.5 billion in 2023, are experiencing sharper scrutiny and additional anti-dumping duties. The US, one of the largest buyers of Vietnamese shrimp and pangasius, recently announced a tariff hike averaging 5-8% on select Vietnamese seafood products. The move has already resulted in a 12% year-on-year drop in US-bound seafood shipments during the first five months of 2024, per Business Insights sector tracking.
Pangasius exports have been particularly hard-hit. With nearly 60% destined for North America and Europe, Vietnam’s pangasius sector now contends with both increased duties and stricter quality checks at borders. Market analysts estimate Vietnam’s pangasius export value could decrease by as much as $350 million in 2024 alone if tariffs persist through the year.
The textile and garment industry is facing a double blow—rising tariffs and a global consumption slowdown. In 2023, textile and garment exports totaled approximately $40 billion, making Vietnam the world’s third-largest exporter after China and Bangladesh. However, new tariffs imposed by several Western markets—averaging 4-6%—now threaten this positioning.
Business Insights reports that export contracts for Vietnamese garments declined by 14% in Q1 of 2024 compared to the same period last year. The reduction was even more pronounced in key segments such as sportswear and fast fashion items, which have shifted to alternative suppliers in South Asia to bypass tariff barriers. For Vietnamese textile enterprises, this translates into thinner profit margins, delayed orders, and, in some cases, workforce reductions.
Vietnam’s rapid growth as a global manufacturing hub has depended on seamless, cost-effective supply chains. Tariffs now challenge that model. To absorb higher export costs, some Vietnamese factories are pursuing vertical integration, sourcing more materials locally or from within ASEAN to minimize exposure to non-preferential trade terms. Yet, these adjustments require time and investment, pressuring short-term profitability and market share.
Meanwhile, foreign investors are reassessing their commitments. Although direct investment into Vietnam totaled $36.6 billion in 2023, Business Insights notes a 7% slowdown in new commitments in H1 2024, especially from US and European firms concerned about regulatory changes and tariff volatility.
Vietnamese exporters have swiftly begun diversifying into new markets—such as Japan, South Korea, and the Middle East—to offset losses from the EU and US. Government officials have initiated talks with trade partners to seek exemptions or reduce the tariff impact on key products, while domestic industry groups are urging more policy incentives to keep their international competitiveness.
Despite these moves, short-term prospects remain cautious. Seafood export forecasts have been revised downward by 9% for 2024, and the textile sector anticipates subdued growth, with many manufacturers expecting revenue to remain flat or decline through the year.
Long-term, Vietnam’s pivot to higher-value manufacturing and product diversification is expected to help mitigate tariff-related risks. Industry leaders are accelerating innovation, improving sustainability compliance, and lobbying for new or revised free trade agreements. The sector’s resilience will hinge on both market-driven flexibility and proactive government support.
For global buyers and importers, evolving trade tensions present both challenges and opportunities. While tariffs may shift supply chains in the short run, Vietnam’s established manufacturing ecosystems and skilled labor base remain attractive for companies seeking agile, cost-effective sourcing alternatives in Southeast Asia.
Tariffs are set to define the new competitive landscape for Vietnam’s seafood and textile sectors in 2024 and beyond. As companies rethink strategies and policymakers negotiate trade terms, markets will continue to watch Vietnam’s response and adaptability—factors crucial not only for Vietnamese exporters, but for the wider regional and global supply chains.