How Are US Tariff Threats Affecting the Vietnamese Electronics Industry?

Vietnam is rapidly emerging as a vital hub for electronics manufacturing as businesses seek cost-effective production sites with strong trade connections. However, US tariff threats could have significant implications for Vietnam’s electronics industry, presenting both challenges and opportunities for the sector.

Vietnam’s growth as a hub for electronics manufacturing is due to a decline in the competitive advantage of other traditional big players in the market. Businesses seeking a manufacturing destination characterized by ample opportunities, competitive costs, and significant trade links will find Vietnam a suitable location for investment.

With US President Donald Trump’s re-emergence on the political scene and the return of his aggressive trade policies, particularly tariffs, Vietnam finds itself both challenged and advantaged. This article investigates how the US tariffs potentially impact the country’s electronics sector in 2025. 

A surge in global market share of Vietnam’s electronics sector

Prior to the inauguration of President Trump in early 2025 and his foreign policy, which altered the world order, Vietnam’s electronics industry experienced a sharp increase in its global market share in 2024.

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According to the General Statistics Office (GSO), electronics exports generated US$126.5 billion in revenue, accounting for one-third of Vietnam’s total export revenue. Additionally, electronic component sales increased to US$72.56 billion, a 27 percent rise from 2023. These changes were driven by sustained demand for components, such as semiconductors, an expanding manufacturing base, and Vietnam’s competitive advantage in the ASEAN region.

Growth catalysts

Market research firm Neuberger Berman Group has stated that imports into the US from Vietnam increased during Trump’s first term, due to Chinese firms investing in Vietnam to bypass US tariffs by exporting through third-party countries. The ongoing retreat of Chinese manufacturing, driven by both rising costs and persistent US tariffs, has prompted global firms to diversify their supply chains, which benefits Vietnam.

Vietnam’s electronics supply chain is now one of the most robust in Southeast Asia. With ports in Hai Phong and Ho Chi Minh City and a strong integration into regional logistics networks, Vietnam has developed a resilient structure encompassing both upstream component manufacturing and final assembly. Additionally, Vietnam benefits from well-established maritime links to both Asian and European markets, as well as proximity to global shipping routes. The expansion of its highway and railway networks, including cross-border corridors connecting to China and Laos, gives it an edge over its rivals in terms of speed and cost efficiency of logistics.

Challenges

However, the Vietnamese Electronics Industry Association (VEIA) has said that most Vietnamese electronics companies are small and medium-sized enterprises. As such, the firms operating in the electronics market face ample challenges, such as supply chains, technology, and a lack of research and development. This limits their ability to produce and achieve greater competitiveness in the global market.

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The VEIA also mentioned that Vietnamese companies need to build stronger international partnerships with countries that have expertise in the electronics sector, such as the US, Japan, and South Korea. While current trends suggest continued growth through 2025, much will depend on Vietnam’s ability to upskill its workforce and invest in R&D. Without these, the country risks plateauing as competitors like India improve their infrastructure.

A closer look at key markets

United States

Since the first wave of tariffs on Chinese goods during Trump’s initial presidential term, Vietnamese exports to the US have surged. By 2025, these exports are expected to continue rising, particularly in components that were previously sourced from China. According to Asem Connects, which cites data from the General Department of Customs, Vietnam’s export turnover for computers and electronics reached nearly US$12.54 billion in the first two months of 2025. This represents a 25.5 percent increase compared to the same period in 2024.

Europe

The EU-Vietnam Free Trade Agreement (EVFTA) has continued to foster positive trade relations, with Vietnamese electronics entering the European market at zero tariffs and experiencing high demand for affordable, high-quality devices. The EU market reached US$68.8 billion in total trade with Vietnam, up 11.8 percent in 2024. Key products, such as computers and components, reached nearly US$10.8 billion, up 66.9 percent, equivalent to a US$4.3 billion increase.

China

Despite competition, China remains a key market for Vietnam. In early 2025, Vietnam’s electronics exports to China totaled US$12.54 billion, representing a notable 36.96 percent increase in shipments, which amounted to US$1.22 billion.

South Korea

In 2023, South Korea was Vietnam’s third-largest trading partner for the second consecutive year. As a major investor in Vietnam, South Korea continues to expand its industrial presence in the country. Samsung alone accounts for over 20 percent of Vietnam’s electronics exports.

Key players and investors

Multinationals such as Google, Intel, and LG have expanded operations in Vietnam in the past 18 months. New investments are also coming in from Taiwanese and Japanese firms seeking alternatives to Chinese manufacturing, driven by the ongoing trade war between China and the US. Additionally, Samsung continues to dominate mobile phone manufacturing in Vietnam; however, Apple has ramped up its assembly in Vietnam through suppliers such as Foxconn and Luxshare.

Vietnam’s key advantages

Vietnam’s electronics industry benefits from a young and competitive labor force, as well as a suite of trade agreements that reduce tariffs and encourage investment. In addition to the EVFTA, agreements with CPTPP countries and regional neighbors give it extensive market access.

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Vietnam maintains a careful neutrality in its political stance, which enables the country to engage with both the United States and China without attracting geopolitical controversy. Despite the looming 46 percent tariff on Vietnamese exports to the US, Vietnamese Minister of Industry and Trade Nguyen Hong Dien has said that Vietnamese ministries and agencies are prepared to negotiate solutions to address US concerns. He emphasized the importance of collaborating with the US to find reasonable solutions that benefit both nations, fostering an atmosphere of mutual interests and shared risks.

Crucially, the government is shifting from low-cost assembly toward high-tech manufacturing. New initiatives promote semiconductor fabrication, R&D centres, and tech incubators. Vietnam has recently approved its first wafer fabrication plant, which is scheduled for completion by 2030. This facility aims to produce specialized chips for defense, artificial intelligence (AI), and high-tech applications.

Takeaways

Vietnam is on an upward trajectory, but competition from India is intensifying. India offers a larger labour pool and a growing infrastructure push under its “Make in India” initiative, putting pressure on Vietnam to stay ahead. Furthermore, Trump’s tariffs still appear to be going ahead, meaning the consequences for the Vietnamese electronics market remain uncertain. Politically, Vietnamese officials have responded to this tariff rhetoric with calm diplomacy, while continuing to push for the diversification of export destinations and the deepening of regional alliances with nations such as China and South Korea. Data from companies such as Vingroup, FPT, and Viettel indicate strong year-on-year revenue growth, accompanied by increasing investments in automation and AI-powered production tools.

The impact of US tariff threats on Vietnam’s economic advantages—whether positive or negative—will depend on how well the country responds to global competition, fosters innovation, and maintains its strategic balance amidst the constantly changing geopolitical landscape.

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