The Analects, also known as the Sayings of Confucius, is an ancient Chinese philosophical text composed of sayings and ideas attributed to Confucius.
Zigong who was born in Xunxian County, Henan Province, China, is regarded as the biggest contributor to the compilation of The Analects. He vowed to promote Confucianism, invested a large sum of money, gathered fellow disciples, and compiled the Master’s teachings into the Analects, which is truly a classic among classics, widely known and spread throughout the land.
Vietnam presents a fascinating mix of opportunities and challenges for foreign investors under the Trump administration in 2025, especially given its evolving economic landscape and the U.S.’s renewed focus on trade policies.
The country’s appeal stems from its rapid growth, strategic location, and role as a manufacturing hub—factors that have drawn significant foreign direct investment (FDI) in recent years. With the Trump administration prioritizing trade imbalances and pushing reciprocal tariffs, here’s a breakdown of what foreign investors might expect.
Vietnam’s economy is booming, with a GDP growth of 7.09% in 2024, reaching $476.3 billion, fueled by strong exports and FDI inflows. Last year, it attracted $39.4 billion in FDI, a 34.5% jump from the prior year, and the government aims to pull in $40–50 billion annually by 2026–2030. Key sectors like manufacturing (think electronics and apparel), tech (semiconductors), and green energy are hotspots. Companies like Samsung, Intel, and Apple have already sunk billions into Vietnam, shifting production from China to sidestep U.S. tariffs—a trend that started during Trump’s first term and could accelerate now. The Trump Organization itself is betting big, partnering with Kinhbac City to develop a $1.5 billion golf course and hotel project in Hung Yen province, signaling confidence in Vietnam’s luxury and tourism potential.
For foreign investors, Vietnam’s advantages are clear: a young, skilled workforce, competitive labor costs (garment workers earn $250 a month versus $700 in China), and a government eager to roll out incentives. The Ministry of Planning and Investment is finalizing a fund to lure high-tech projects—think AI, semiconductors, and R&D centers—with minimum investments starting at $235 million for some categories. Add to that Vietnam’s push for renewable energy (aiming for 30.9–39.2% of its energy mix by 2030) and its digital economy surging 19% to $30 billion in 2023, and you’ve got a compelling case for diversification beyond traditional manufacturing.
Photo: Olivier Ochanine
But the Trump administration’s trade stance casts a shadow. Vietnam’s trade surplus with the U.S. hit nearly $100 billion last year, making it America’s third-largest trade partner after China and Mexico. Trump’s fixation on reducing deficits could lead to tariffs—potentially 20% on all imports, with harsher measures if Vietnam’s seen as a conduit for Chinese goods dodging U.S. levies. This “tariff-jumping” risk is real: as Chinese firms flood Vietnam with investment to reroute exports, Hanoi’s vulnerability spikes. Analysts note that while Vietnam benefits from U.S.-China tensions, it could become “collateral damage” if Trump’s protectionism broadens. Eric Trump’s quip about Vietnam “ripping off” the U.S. hints at this tension.
On the flip side, Trump’s personal stake in Vietnam and his administration’s likely push to diversify supply chains away from China could work in investors’ favor. Vietnam’s role in reducing U.S. reliance on Chinese low-cost goods—especially in tech and electronics—might earn it some leeway. Plus, deregulation and tax cuts (like dropping the corporate rate to 15%) could funnel more U.S. investment into Vietnam via third countries like Singapore, which already leads FDI there.
The catch? Vietnam’s regulatory environment isn’t perfect—bureaucratic hurdles, weak intellectual property protections, and skill gaps in high-tech fields could trip up newcomers. The government’s proactive, though—streamlining processes, offering tax breaks, and eyeing a bilateral investment agreement with the U.S. to boost American FDI, which lags at 13th place despite big names like Nike and Intel.
For foreign investors, the play is strategic: tap into Vietnam’s growth in manufacturing, tech, and green sectors while hedging against tariff risks. Diversifying markets beyond the U.S.—think Europe or Africa—could offset exposure. It’s a high-stakes game, but Vietnam’s momentum and the Trump administration’s unpredictable pragmatism could make it a winning bet for those who navigate it smartly. Thoughts on where you’d place your chips?
Vietnam’s economy has become heavily reliant on exports to the United States, which last year made up 30% of its GDP—the highest proportion among America’s major trading partners—leaving it exposed to potential U.S. tariffs, according to a Reuters analysis of public data.
The Southeast Asian country saw a wave of foreign investment after the U.S.-China trade war kicked off in 2018 under the first Trump administration. Companies shifted production from China to Vietnam to dodge U.S. tariffs, turning it into a manufacturing hotspot. Big names like South Korea’s Samsung Electronics, Taiwan’s Foxconn, and American giants Apple, Intel, and Nike have set up shop there, producing goods largely destined for the U.S. market.
This influx of investment has transformed Vietnam into a key player in global supply chains and deepened its economic relationship with the United States, its former wartime enemy. Vietnamese customs data shows 29% of its exports now head to the U.S. In 2024, Vietnam exported $142.4 billion worth of goods to the U.S., making it the sixth-largest supplier after Mexico, China, Canada, Germany, and Japan, per U.N. trade stats.
Infrastructure is the big challenge for Vietnam, especially at its ports.
With a GDP of $468 billion (based on IMF figures), those U.S.-bound exports equaled roughly 30% of Vietnam’s economy—a bigger share than any other U.S. trading partner. Mexico comes close, with exports worth 27.6% of its GDP, and it’s already facing Trump’s threats of 25% tariffs. Meanwhile, China’s U.S. exports are just 2.5% of its GDP, and Japan’s are 3.7%.
Vietnam’s dependence leaves it at risk as the U.S., under President Donald Trump, gears up for reciprocal tariffs by April. Its massive trade surplus with the U.S.—the fourth largest after China, the EU, and Mexico, per U.S. data—could put it in the crosshairs. Add to that its higher tariffs compared to the U.S., VAT charges, non-trade barriers, and a spot on the U.S. currency manipulation watchlist, and experts like Sayaka Shiba from BMI say Vietnam checks all the boxes for tariff scrutiny.
The Communist-led nation’s export boom, paired with minimal imports from the U.S., only heightens its exposure as Washington eyes trade imbalances worldwide.
Vietnam has rolled out a comprehensive set of guidelines to evaluate the efficiency of foreign direct investment (FDI), aiming to gauge its true contribution to the nation’s progress.
Issued under Decision 315/QD-TTg by Prime Minister Pham Minh Chinh, the framework introduces 42 carefully crafted criteria, spanning economic, social, and environmental dimensions. These metrics spotlight how foreign capital shapes growth, innovation, and sustainability, while fostering stronger ties with local businesses.
A Holistic Approach
The new criteria offer a 360-degree view of FDI’s role in Vietnam’s development. At its core, the system assesses factors like investment scale, operational success, technological upgrades, tax revenue, and ripple effects across the economy. It’s designed to ensure foreign ventures don’t just land and profit—they must enrich Vietnam’s economic fabric, uplift communities, and tread lightly on the environment.
The 42 indicators break down into three key areas: 29 economic measures, eight social benchmarks, and five environmental standards. Together, they paint a detailed picture of how FDI aligns with Vietnam’s ambitions to become a modern, sustainable economy.
Economic Impact Under the Microscope
The economic metrics, grouped into six categories, form the backbone of the evaluation:
Scale and Socio-Economic Contribution (8 indicators): These measure FDI’s heft in driving growth, from capital inflows to its share in national development.
Operational Efficiency (10 indicators): This dives into how well foreign firms perform, spotlighting productivity and profitability.
State Budget Contributions (3 indicators): Focused on tax payments, these gauge how much FDI bolsters public coffers.
Spillover Effects (2 indicators): These track how foreign investment sparks growth in domestic industries.
Technological Progress (2 indicators): A look at how FDI brings cutting-edge tools and know-how to Vietnam.
Innovation Boost (4 indicators): These assess FDI’s role in fueling Vietnam’s creative and tech-driven future.
Together, these benchmarks aim to ensure foreign investment isn’t just a numbers game—it’s a catalyst for broader economic vitality.
Social Gains in Focus
Beyond dollars and cents, the framework prioritizes FDI’s human impact through eight social indicators, split into three clusters:
Jobs and Income (6 indicators): These highlight job creation and wage improvements for Vietnamese workers.
Gender Equality (1 indicator): A nod to fair employment practices across genders.
Legal Compliance (1 indicator): Ensuring foreign firms play by Vietnam’s rules.
This social lens underscores a key goal: foreign investment should lift living standards and strengthen the workforce, not just corporate bottom lines.
Green Standards Take Root
Rounding out the framework, five environmental indicators hold FDI accountable for its ecological footprint:
The share of foreign firms adopting energy-saving practices.
The percentage of facilities earning national or international ISO 14001 environmental management certification.
The growth rate of ISO 14001-certified sites.
The proportion of foreign businesses meeting Vietnam’s environmental laws.
The contribution of FDI-driven greenhouse gas emissions to the national total.
These measures signal Vietnam’s push for sustainability, ensuring foreign projects align with its green goals rather than burdening the planet.
A Strategic Move Forward
This new evaluation system reflects Vietnam’s evolving approach to FDI. With foreign investment pouring in—$25.35 billion in 2024 alone—the country isn’t content to be a passive player. By setting clear, multi-faceted standards, Hanoi aims to maximize the benefits of global capital while minimizing downsides. It’s a balancing act: welcoming investors with open arms, but on terms that serve Vietnam’s long-term vision.
As the nation outpaces regional peers like Malaysia and Thailand in export growth, these criteria could sharpen its competitive edge. They send a message to the world: Vietnam seeks quality investment—ventures that fuel innovation, empower people, and respect the environment. For foreign firms eyeing this dynamic market, the bar has been raised, and the rewards could be transformative.
In 2024, Vietnam emerged as a shining star among Southeast Asia’s manufacturing powerhouses, posting robust export growth that left regional peers Malaysia and Thailand in its wake.
While global supply chains continued to shift away from China, Vietnam seized the moment, capitalizing on its strategic advantages and export momentum—particularly to the United States. This standout performance not only underscores Vietnam’s growing clout in international trade but also signals its potential to redefine the region’s economic landscape.
Official data paints a compelling picture: Vietnam’s exports surged by 14.3% in 2024, reaching $405.53 billion, driven by strong demand for electronics, smartphones, clothing, and agricultural goods. In contrast, Malaysia and Thailand, while still vital players in the ASEAN bloc, struggled to match this pace. Malaysia’s export growth hovered around 12.7%, buoyed by commodities like palm oil and electronics, while Thailand’s lagged closer to 8%, hampered by weaker demand for automotive parts and rice. Vietnam’s edge, analysts say, lies in its ability to ride the wave of U.S.-bound shipments, a trend accelerated by trade tensions and diversification strategies reshaping global supply chains.
Sophie Dao, Senior Partner at Global Business Services LLC (GBS), an investment consulting firm based in Vietnam, sees this as a watershed moment. “Vietnam’s export growth in 2024 is a testament to its resilience and adaptability,” she remarks. “The country has positioned itself as a reliable hub for manufacturers looking to diversify beyond China, and the numbers reflect that trust. It’s an exciting time for businesses here—both local and foreign.” Dao’s optimism echoes the sentiment of many investors who view Vietnam as a cornerstone of the “China-plus-one” strategy, where companies maintain operations in China while expanding into nimbler, cost-effective markets like Vietnam.
What’s Driving Vietnam’s Success?
Several factors fueled Vietnam’s export boom last year. First, its proximity to China allowed manufacturers to tap into existing supply chains while avoiding the tariffs and restrictions increasingly imposed on Chinese goods. Second, a young, skilled workforce—58% of its 100 million people are under 35—kept labor costs competitive, drawing giants like Apple, which has poured over $15 billion into Vietnam over the past five years. Third, Vietnam’s 17 free trade agreements, including the Regional Comprehensive Economic Partnership (RCEP), opened doors to markets across Asia, Europe, and beyond.
The U.S. market, in particular, proved a goldmine. Vietnam’s trade surplus with the United States hit $104 billion in 2023, a figure likely dwarfed by 2024’s final tally as exports of tech gadgets and textiles soared. “The shift in U.S.-bound shipments has been a game-changer,” Dao notes. “Companies are rerouting production to Vietnam not just for cost savings, but for stability and access to a growing consumer base. It’s a win-win.”
Compare that to Malaysia and Thailand, where export growth, while solid, leaned heavily on traditional strengths. Malaysia’s electronics sector thrived, but its reliance on commodities left it vulnerable to price swings. Thailand, meanwhile, faced headwinds from a sluggish global recovery and domestic political uncertainties. Vietnam, by contrast, balanced its export portfolio—electronics led the charge, but farm produce like coffee and rice also shone—demonstrating a versatility that set it apart.
A Bright Spot in a Challenging Year
Vietnam’s 7.09% GDP growth in 2024, up from 5.05% in 2023, further cements its breakout status. Despite challenges like Typhoon Yagi, the strongest storm to hit Asia that year, the country’s economy roared ahead, propelled by $25.35 billion in foreign investment and an 8.4% rise in industrial output. Exports played a starring role, with 37 key items raking in over $1 billion each, accounting for 94.3% of total export value. Eight of those—think smartphones and solar panels—cleared the $10 billion mark, a feat that underscores Vietnam’s climb up the value chain.
For Dao, this resilience is no fluke. “Vietnam has turned adversity into opportunity,” she says. “The government’s proactive policies—streamlined regulations, infrastructure upgrades, and trade promotion—have created a fertile ground for growth. Investors are taking notice, and that’s only going to accelerate in 2025.”
Looking Ahead
Vietnam’s edge over Malaysia and Thailand isn’t just a 2024 headline—it’s a trend with legs. As U.S. President Donald Trump’s second term begins in January 2025, his tariff threats loom large, potentially pushing more firms to seek alternatives to China. Vietnam, already a proven player, stands ready to absorb that shift. The General Statistics Office projects trade turnover could hit $807.7 billion by year-end, a record that would solidify its lead in the region.
Still, challenges remain. Vietnam’s infrastructure, while improving, strains under rapid growth, and its trade surplus with the U.S. risks drawing scrutiny. Yet Dao remains bullish. “The momentum is undeniable,” she says. “Vietnam isn’t just outpacing its neighbors—it’s setting a new benchmark for what Southeast Asia can achieve. The world is watching, and we’re just getting started.”
In a region brimming with potential, Vietnam’s 2024 export surge marks it as the one to beat. Malaysia and Thailand remain formidable, but for now, Vietnam’s blend of agility, ambition, and opportunity has put it firmly ahead of the pack.
Vietnam is joining a growing list of nations pushing back against China’s steel juggernaut. Starting in early March, the Southeast Asian country will slap temporary anti-dumping tariffs on certain Chinese hot-rolled coil (HRC) imports, a move announced by its Ministry of Industry and Trade on February 21, 2025.
Following in the footsteps of South Korea, Brazil, and India, Vietnam aims to shield its domestic steel industry from the flood of cheap exports fueled by China’s construction slump. As the largest buyer of Chinese steel outside China itself, Vietnam’s decision marks a bold shift in its trade strategy—and a potential turning point for global steel markets.
A Global Steel Storm
China, the world’s top steel producer, unleashed a torrent of exports in 2024—over a billion tonnes, the most in nearly a decade—as its domestic property sector faltered. With construction demand drying up at home, Chinese mills turned outward, dumping steel onto global markets at cut-rate prices. Vietnam, a key destination, absorbed roughly 8 million tonnes of HRC alone last year, a volume that has squeezed local producers like Hoa Phat Group and Formosa Ha Tinh Steel Corp. The ripple effects are being felt worldwide, prompting U.S. President Donald Trump to float a sweeping 25% tariff on all U.S. imports and spurring other nations to erect their own trade barriers.
For Vietnam, the stakes are high. Hot-rolled coil, a versatile steel product used in everything from cars to construction, is a cornerstone of Chinese exports to the country. But the influx has battered local steelmakers, who last year called for an investigation into imports from China and India. While India escapes tariffs for now, Vietnam’s new levies—ranging from 19.38% to 27.83%—will hit about half of China’s HRC shipments starting March 7. The measures, set to last 120 days, signal Hanoi’s readiness to protect its industrial backbone amid a global trade showdown.
Pressure on Beijing
Vietnam’s tariffs add to mounting pressure on China to tame its colossal steel industry. Analysts like Jack Shang from Citigroup suggest that this wave of protectionism could force Beijing to revisit supply-side reforms, a tactic it used in the mid-2010s to curb overcapacity and shore up profits. “These moves should nudge China toward another round of discipline,” Shang noted, highlighting the potential for tighter production controls to steady the market. On the trading floor, the reaction was swift: steel futures in Shanghai dipped 1.3% by midday Friday, while Vietnam’s steel stocks climbed, reflecting investor confidence in the tariff shield.
The broader context ties back to U.S.-China tensions. Trump’s latest investment curbs, announced days before Vietnam’s tariff decision, aim to choke Chinese access to strategic U.S. sectors. While steel wasn’t explicitly targeted, the looming threat of blanket tariffs has amplified the urgency for Chinese producers to secure alternative markets—or face a profitability crunch. Vietnam, long a beneficiary of China’s supply chain shifts, now finds itself balancing opportunity and defense.
Vietnam’s Balancing Act
For Vietnam, the tariffs are more than a trade tactic—they’re a statement. The country has thrived as a manufacturing hub, drawing billions in foreign investment as firms diversify away from China. Yet its reliance on Chinese steel imports has left it exposed. By targeting HRC, Hanoi is safeguarding jobs and revenue at companies like Hoa Phat, whose lobbying helped trigger the anti-dumping probe. At the same time, Vietnam must tread carefully: China remains a vital economic partner, and overly aggressive measures could strain relations or disrupt supply chains.
The market response underscores the stakes. While China’s HRC futures slid, iron ore prices in Singapore held steady at $107.45 a tonne, suggesting resilience in raw material demand. Vietnam’s steelmakers, meanwhile, saw gains, buoyed by the prospect of a more level playing field. Still, the temporary nature of the tariffs—120 days—leaves room for adjustment, hinting at a pragmatic approach as Hanoi gauges the fallout.
A Wider Trend
Vietnam’s move mirrors a global pushback against China’s steel dominance. South Korea recently tightened its own import rules, while Brazil and India weigh similar levies. The collective action reflects a shared frustration: China’s export surge threatens industries far beyond its borders. For Vietnam, the challenge is to leverage this moment without alienating a neighbor whose economic heft still looms large. If successful, these tariffs could bolster domestic production and signal Vietnam’s growing assertiveness in a turbulent trade landscape.
As March 7 approaches, all eyes will be on how China responds—and whether Vietnam’s gamble pays off. For now, the message is clear: even as it welcomes investment, Vietnam isn’t afraid to draw a line in the steel.
On February 21, 2025, U.S. President Donald Trump signed a memorandum titled “America First Investment Policy,” signaling a sharp escalation in efforts to restrict Chinese investments in strategic American sectors like technology, infrastructure, healthcare, agriculture, and energy.
This move, aimed at safeguarding U.S. national security, is poised to redirect Chinese capital away from the United States—and Vietnam stands ready to catch the wave. With its strategic location, competitive labor costs, and established role as a manufacturing hub, Vietnam could see a significant influx of investment from Chinese firms looking to diversify their operations. However, this opportunity comes with its own set of challenges that Hanoi must navigate carefully.
A Shifting Global Landscape
Trump’s memorandum leverages the Committee on Foreign Investment in the United States (CFIUS) to block Chinese-affiliated investments in key industries, building on a trend of tightening restrictions that began during his first term and continued under the Biden administration. The policy reflects growing concerns in Washington about China’s access to American technology and resources, accusing Beijing of exploiting U.S. capital to bolster its military and intelligence capabilities. For Chinese companies, this translates to a shrinking welcome mat in the world’s largest economy—an unwelcome development amid their own domestic pressures, including economic slowdown and stricter regulations at home.
This isn’t the first time U.S. policy has pushed Chinese firms to look elsewhere. Since the U.S.-China trade war kicked off in 2017, Vietnam has emerged as a prime beneficiary of supply chain diversification. Multinational corporations and Chinese manufacturers alike have flocked to Vietnam, drawn by its proximity to China, affordable workforce, and access to global markets through 17 free trade agreements. Foreign direct investment (FDI) in Vietnam soared to $248.3 billion from 2017 to 2023, with Chinese investment nearly doubling in 2023 alone to $3.9 billion (excluding Hong Kong). Trump’s latest curbs could supercharge this trend, as Chinese firms seek new bases to maintain their global reach.
Why Vietnam?
Vietnam’s appeal is multifaceted. Geographically, it’s a stone’s throw from China, minimizing logistical costs for firms reliant on Chinese supply chains. Its labor force, while not as cheap as it once was, remains competitive compared to China’s rising wages. The country’s infrastructure—ports, roads, and industrial parks—has improved dramatically, making it a viable hub for electronics, solar panels, and electric vehicle components. Add to that Vietnam’s trade agreements, like the Regional Comprehensive Economic Partnership (RCEP), and it’s clear why companies see it as a launchpad to bypass U.S. tariffs.
Take the solar panel industry as an example. Chinese firms have already ramped up production in Vietnam, with exports to the U.S. hitting $4.2 billion in 2023—26% of America’s total solar panel imports that year. Trump’s new restrictions could accelerate this shift, pushing more Chinese manufacturers to set up shop in Vietnam to sidestep barriers to the U.S. market. Electronics giants like Luxshare and Goertek, suppliers to Apple, have also doubled down on Vietnam, with investments of $504 million and $280 million, respectively, signaling a broader “China-plus-one” strategy that could gain momentum.
The Upside for Vietnam
For Vietnam, this wave of investment promises economic growth and industrial upgrading. In 2024, the country’s economy expanded by 7.09%, outpacing most of its neighbors, driven by strong exports and foreign investment. Chinese capital could further bolster key sectors like semiconductors and high-tech manufacturing, areas where Vietnam aims to climb the value chain. Jobs would follow, boosting local employment and consumer spending. Moreover, as Chinese firms bring technology and expertise, Vietnam could position itself as a more sophisticated player in global supply chains, reducing its reliance on low-value assembly work.
The timing couldn’t be better. With the U.S. and China vying for influence in Southeast Asia, Vietnam’s “bamboo diplomacy”—balancing relations with major powers—positions it to capitalize on both sides. The U.S. has upgraded ties with Vietnam to a Comprehensive Strategic Partnership, eyeing it as a friend-shoring partner, while China’s Xi Jinping has pushed for a “shared future” with Hanoi. Caught in the middle, Vietnam can leverage this rivalry to attract investment from both, though China’s proximity and economic heft make it the more immediate opportunity.
The Catch
Yet, this golden opportunity isn’t without risks. A flood of Chinese investment could deepen Vietnam’s entanglement with China’s supply chains, raising concerns in Washington. The U.S. has already flagged Chinese firms using Vietnam as a conduit to dodge tariffs—solar panels being a prime example. In April 2024, U.S. authorities launched anti-dumping investigations into Vietnamese solar exports, and Trump’s return could broaden such scrutiny to other goods. Vietnam’s $104 billion trade surplus with the U.S. in 2023 already puts it on the radar; any perception that it’s a backdoor for Chinese goods could strain U.S.-Vietnam ties and invite punitive tariffs.
Employees use sewing machines at the Pan-Pacific Company Viet Pacific Clothing (VPC) factory in Vo Cuong, Bac Ninh province, Vietnam. Pan Pacific manufactures and exports feather-down products, apparel, bedding goods, and needlework products. Photo by SeongJoon Cho | Bloomberg | Getty Images
Domestically, Vietnam must tread carefully too. Anti-Chinese sentiment runs deep, fueled by historical tensions and disputes in the South China Sea. Past investments have sparked protests—like the 2018 backlash against special economic zones perceived to favor China. Hanoi will need to balance economic gains with public sentiment, ensuring Chinese projects don’t overwhelm local industries or exploit resources excessively.
Seizing the Moment
To maximize this opportunity, Vietnam should adopt a selective approach. Prioritizing high-value investments—think semiconductors over labor-intensive factories—could align with its long-term goals while minimizing U.S. backlash. Strengthening rules of origin and cracking down on transshipment would signal to Washington that Vietnam isn’t a mere passthrough. Investing in energy infrastructure to avoid blackouts, like those that plagued northern industrial parks in 2023, would also reassure investors of reliability.
Trump’s curbs on Chinese investment in the U.S. mark a pivotal shift, one that could funnel billions into Vietnam’s economy. If Hanoi plays its cards right, it could ride this wave to new heights, cementing its status as a global manufacturing powerhouse. But success hinges on agility—balancing economic ambition with geopolitical realities in a world where the U.S. and China are tugging ever harder in opposite directions.
Vietnam has rapidly evolved into a global sourcing powerhouse, attracting businesses with its competitive labor costs, strategic location, and robust trade agreements. However, beyond identifying top products, it is essential to analyze Vietnam’s sourcing market from a strategic standpoint to fully leverage its potential.
Best “Made in Vietnam” Products for sourcing in 2026
Vietnam’s manufacturing sector has grown significantly in recent years, making it an attractive sourcing location for the following top seven products:
Electronics : Vietnam’s electronics manufacturing sector is rapidly expanding, offering competitive pricing and strong production capabilities.
Machinery & Tools : The machinery and tools industry in Vietnam is steadily developing, providing cost-effective solutions for various industrial needs.
Textiles & Garments : Vietnam’s well-established textile and garment manufacturing hub delivers high-quality products with competitive labor costs.
Footwear : Vietnam is one of the world’s largest footwear exporters, producing shoes for both global brands and smaller buyers.
Furniture : Vietnamese furniture manufacturing is known for skilled craftsmanship, diverse materials, and access to large export markets.
Handicraft : Vietnam’s rich cultural heritage contributes to a vibrant handicraft sector offering unique, handcrafted items.
Agricultural Products : Vietnam’s agricultural exports, such as rice, coffee, and spices, remain a cornerstone of the country’s global trade.
Manufacturing in Vietnam presents unique challenges, from navigating communication barriers with local factories to overcoming cultural differences and regulatory hurdles. Effective strategies for working with Vietnamese factories, such as establishing clear expectations and maintaining quality control, can significantly ease production difficulties. These insights can be explored further in the video below, which covers the best products to import from Vietnam and key sourcing trends in 2025.
It’s also helpful to plan factory visits, leverage local trade fairs, and identify “must-know” industry shows that offer valuable insights into the country’s manufacturing landscape. Additionally, partnering with a sourcing agent can streamline operations, offering on-the-ground support and expertise. These topics, along with practical tips for successful manufacturing in Vietnam, are explored in more detail within the accompanying video.
The Geopolitical Advantage of Vietnam
Vietnam’s position in Southeast Asia provides businesses with significant trade advantages. As global supply chains shift away from traditional manufacturing giants like China, Vietnam has emerged as a preferred alternative. Trade agreements such as the EU-Vietnam Free Trade Agreement (EVFTA) and the Regional Comprehensive Economic Partnership (RCEP) reinforce Vietnam’s role in international commerce by reducing tariffs and improving market access.
To navigate these opportunities effectively, it is crucial to gain deeper insights from industry experts.
The Impact of Trump’s Tariffs on Global Trade
The reintroduction of tariffs by the Trump administration in 2025 is forcing businesses to reassess their supply chain strategies. The new tariffs include a 10% tariff on imports from China, 25% on all imports from Mexico, and tariffs on most goods from Canada. These policies are pushing companies to explore alternative sourcing options to mitigate rising costs.
For Vietnam, this shift presents an opportunity to attract manufacturers seeking to bypass higher tariffs on goods from China, Mexico, and Canada. In previous years, Vietnam has benefitted from this dynamic, as businesses looked to Vietnam as a cost-effective alternative to China, especially in industries like electronics, textiles, and furniture. The lower production costs and proximity to China make Vietnam an appealing choice for companies looking to diversify their supply chains and reduce their exposure to tariff risks.
However, businesses must stay vigilant and monitor potential changes in U.S. trade policies, as the situation is constantly evolving. While Vietnam has benefitted from tariff shifts in the past, it is essential to track the long-term impacts on various sectors.
The Vietnamese government plays a key role in fostering industrial growth through substantial investments in infrastructure, export incentives, and trade facilitation. Special economic zones (SEZs) and industrial parks offer businesses valuable tax benefits and logistical support, creating an attractive environment for sourcing.
Diversified Manufacturing Base
Unlike some sourcing destinations that rely heavily on a single or few industries, Vietnam has established a diverse manufacturing ecosystem. Key sectors include electronics, textiles, furniture, footwear, and agricultural exports, all of which contribute significantly to its economy. This diverse base gives businesses flexibility when sourcing across various product categories.
Sustainability & Green Manufacturing
Vietnam’s focus on sustainable production methods is also attracting businesses prioritizing eco-friendly sourcing. The growing emphasis on solar energy, reduced carbon emissions, and ethical labor practices is becoming central to manufacturing processes, making Vietnam an increasingly attractive choice for businesses with sustainability goals.
Challenges in Vietnam’s Sourcing Market
Despite its advantages, sourcing from Vietnam presents certain challenges that businesses must be prepared to address:
Tariff Uncertainty: With the ongoing fluctuations in U.S. tariffs impacting Vietnamese exports, businesses need to stay informed about trade policy changes to anticipate cost fluctuations.
Infrastructure Gaps: Although Vietnam’s infrastructure is improving, some areas still struggle with port congestion and logistical inefficiencies, which can impact supply chain operations.
Skilled Labor Shortage: The demand for skilled labor in advanced manufacturing sectors is creating wage pressures and may limit the capacity to scale production.
Quality Control & Compliance: Ensuring product consistency can be challenging, making it crucial for businesses to establish strict quality control measures when sourcing from Vietnam.
To optimize sourcing operations, businesses should consider the following strategies:
Partner with Local Experts: Engaging with reliable sourcing agents helps businesses navigate cultural differences and business practices, ensuring smoother operations.
Diversify Supplier Networks: By sourcing from multiple regions within Vietnam, businesses can minimize risks posed by tariff fluctuations and supply chain disruptions.
Conduct Factory Visits: Personal inspections and participation in trade fairs allow businesses to gain deeper insights into the capabilities and reliability of potential suppliers.
Leverage Digital Supply Chain Solutions: Investing in digital tools for tracking, monitoring, and quality control enhances efficiency and reduces risks, especially in the post-pandemic world where digital transformation is key to success.
Final Thoughts
Vietnam’s sourcing market in 2026 is not just about identifying profitable products but understanding the strategic landscape. Businesses must weigh geopolitical factors, government policies, and sustainability trends alongside product opportunities. The shifting U.S. tariff landscape adds complexity, making it essential for businesses to adopt flexible and adaptive sourcing strategies. By embracing these strategies and monitoring the evolving landscape, companies can optimize their sourcing operations in Vietnam and tap into the growing potential of this dynamic market.
Vietnam has reinforced its commitment to combating human trafficking with the introduction of the Law on Prevention and Combat of Human Trafficking 2024, which places a strong emphasis on protecting victims’ rights and ensuring their well-being.
The law, passed during the 8th session of the 15th National Assembly, will come into effect on July 1, 2025.
Compared to its 2011 predecessor, the 2024 Law on Prevention and Combat of Human Trafficking introduces several new provisions, particularly regarding fundamental principles for addressing human trafficking.
Under Article 4, the law stipulates that all efforts to prevent and combat human trafficking must: Respect and protect the legitimate rights and interests of victims, as well as individuals in the process of being identified as victims; Take victims as the focal point, ensuring that policies and interventions prioritize their needs; Promote gender equality, safeguarding the rights of both men and women affected by trafficking.
Furthermore, victims and individuals in the process of being identified as victims must be provided with: The ability to communicate in a language they understand; Support services that respect their religious and cultural beliefs;
Assistance tailored to their age, gender, health status, and personal circumstances.
The law introduces a significant provision stating that victims of human trafficking who commit illegal acts as a direct consequence of being trafficked may not be subject to administrative sanctions or criminal prosecution, depending on the circumstances and relevant legal provisions.
The new law also underscores the importance of international cooperation in combating human trafficking. Vietnam aims to enhance cross-sectoral coordination to improve anti-trafficking efforts; actively participate in international organizations, treaties, and agreements on human trafficking prevention; and to nsure all cooperation aligns with the Vietnamese Constitution, national laws, and international legal standards.
By integrating these new principles, the Law on Prevention and Combat of Human Trafficking 2024 is expected to enhance the effectiveness of Vietnam’s anti-trafficking initiatives, strengthen legal consistency, and align with international commitments. This updated framework reflects Vietnam’s ongoing efforts to protect vulnerable individuals and combat human trafficking more effectively.
Unable to stop his son from having an extramarital affair, a father in Hanoi spent 200 million VND to hire a group of thugs to break the legs and throw acid on his son’s lover.
On the evening of February 20, Hanoi Police announced that the Criminal Police Department (PC02) of Hanoi Police had just arrested 9 suspects related to the case of a woman being attacked and splashed with acid .
Previously, at around 10:20 p.m. on February 12, Son Tay Town Police (Hanoi) received a report from Ms. H. (30 years old, residing in Thanh Ba District, Phu Tho) that on the evening of the same day, when she returned to her rented house in Tan Phuc village (Son Dong commune, Son Tay Town), two men sprayed pepper spray in her face, then beat her with an iron rod and threw acid on her thighs, legs, and arms, causing serious injuries.
The suspects in the case PHOTO: PROVIDED BY POLICE Determining the reckless nature of the subjects, the Director of Hanoi Police directed PC02 to investigate.
On February 19, PC02 of Hanoi Police arrested 9 suspects, including: Do Van Tan (49 years old, residing in Phung Thuong commune, Phuc Tho district, Hanoi), Do Thi Kim Phuong (25 years old, residing in Phung Thuong commune; Tan’s daughter), Khuat Van Tuy (34 years old, residing in Cam Yen commune, Thach That district, Hanoi), Pham Xuan Ton (38 years old, residing in Ngoc Lien commune, Cam Giang district, Hai Duong), Pham Duc Anh (36 years old, residing in Ngoc Lien commune), Le Duc Dung (16 years old, residing in Cam Dien commune, Cam Giang district), Tran Ba Quan (17 years old, residing in Luong Dien commune, Cam Giang district), Bui Dinh Ngach (40 years old, residing in Cam Phuc commune, Cam Giang district) and Le Van Nhat (31 years old, residing in Phuc Dien commune, Cam Giang district).
Do Van Tan and Do Thi Kim Phuong PHOTO: PROVIDED BY POLICE
Initially, PC02 Hanoi Police identified D.QT as Tan’s son, who had a wife and 2 children but had an extramarital affair with Ms. H. despite his family’s objections.
On February 11, Tan and his daughter, through Ton’s introduction, hired Anh, Nhat, Dung, and Quan to break H.’s legs and throw acid on her for 200 million VND.
Then, Nhat prepared pepper spray and a baseball bat while Phuong and Tuy prepared acid to give to Nhat.
Initial information, Mr. Th. and T. went to fish, approached the area where the mother buffalo and 4 buffalo calves were. Both of them teased the buffalo and were gored.
Regarding the case of two men being gored by a buffalo and hospitalized with serious injuries, on February 23, the People’s Committee of Vinh Loc A Commune (Binh Chanh District) said that representatives of the People’s Committee and Vinh Loc A Commune Police went to the hospital to inquire about the health and situation of the injured.
Two victims gored by a buffalo were taken to the ambulance.
Accordingly, the two people injured by the buffalo gore were Mr. Ha Van T. (40 years old, in Thanh Hoa) and Mr. Tran Phuoc Th. (43 years old, in Quang Nam).
Mr. Th. was gored by a buffalo, his genitals were torn, his shoulder was dislocated. His health is now stable and he has been discharged from the hospital. Mr. T. is still being treated at Cho Ray Hospital.
Previously, at around 12:30 p.m. on February 22, at an empty lot in Hamlet 38, Vinh Loc A Commune, Binh Chanh District, a buffalo gored, injuring Mr. T. and Th.
Initial information provided by local people was that both of them went to fish and approached the area where the mother buffalo and 4 buffalo calves were (all 5 buffaloes were tied up).
Both of them teased the buffalo, so the mother buffalo that had just given birth charged and injured her. The buffalo owner, Mr. D.VT (52 years old, in Vinh Loc A commune, Binh Chanh district), after the incident, contacted the victim to come up with a plan to support and treat the injury.
After verifying the incident, Vinh Loc A Commune Police are temporarily holding the electric shock device of the two victims who were gored by the buffalo to serve as a basis for handling responsibility later.
Vietnam has increasingly become a focal point for international attention in early 2025, with foreigners—ranging from investors to tourists and policymakers—showing a surge of interest in the Southeast Asian nation.
From economic strides to cultural allure and geopolitical shifts, here’s what’s driving the buzz about Vietnam today.
A Manufacturing Powerhouse Draws Investors
One of the loudest headlines is Vietnam’s rise as a manufacturing hub, often dubbed the “new workshop of the world.” With global supply chains shifting away from traditional powerhouses like China, foreign companies are eyeing Vietnam for its skilled workforce, competitive labor costs, and strategic location. Tech giants like Samsung and Intel have long had a foothold here, but recent moves signal even deeper investment. Nvidia, for instance, is reportedly collaborating with Vietnam to establish R&D centers, while the government pushes to train tens of thousands of engineers in semiconductors and AI. This tech-driven ambition has foreigners talking about Vietnam not just as a factory floor, but as a future innovation hub.
The numbers back up the hype: Vietnam’s economy grew by over 7% in 2024, exceeding expectations, and the government is aiming for an ambitious 8% in 2025. Foreign direct investment is pouring in, with pledges spiking nearly 50% in January alone. For business-minded foreigners, Vietnam represents a rare blend of stability and opportunity in a volatile global market—a narrative amplified by its proactive trade policies, like opening doors to U.S. agricultural imports to balance its hefty trade surplus with America.
Geopolitical Chess: Tariffs and Tensions
Vietnam’s economic story doesn’t come without complications, and foreigners are keenly watching its geopolitical tightrope walk. The specter of U.S. tariffs under President Donald Trump’s administration has put Vietnam in a delicate spot. With a trade surplus of around $100 billion with the U.S. in 2023, the country is a potential target for protectionist measures, like the newly imposed 25% steel tariffs. Yet, Vietnam’s leaders are playing a savvy game—engaging with U.S. officials to avoid further duties while deepening ties with American firms, such as Boeing, through multi-billion-dollar deals.
Meanwhile, tensions in the South China Sea keep Vietnam on the radar of foreign analysts. China’s opposition to Vietnam’s construction on disputed reefs, like Barque Canada, underscores the region’s strategic stakes. For foreigners interested in global power dynamics, Vietnam’s balancing act—courting Western investment while managing its powerful neighbor—offers a compelling subplot to its economic ascent.
Cultural and Tourism Appeal
Beyond boardrooms and battlegrounds, Vietnam’s cultural richness and natural beauty are pulling in a different crowd: travelers and expats. Recent data from Vietnam’s tourism authorities shows a spike in foreign Google searches for travel-related queries over the past three months. From the lantern-lit streets of Hoi An to the bustling energy of Hanoi, Vietnam’s blend of tradition and modernity is a magnet for those seeking authentic experiences. The Apollo New Delhi Marathon 2025 even saw international participation, with figures like Japan’s ambassador joining in, hinting at Vietnam’s growing soft power.
Foreigners are also intrigued by Vietnam’s vibrant daily life—sometimes with mixed reactions. Posts trending on social platforms highlight expats marveling at (or struggling with) local quirks, like blaring karaoke sessions in city neighborhoods or the carb-heavy delights of Tet festivities. These snippets reveal a country that’s both welcoming and wonderfully distinct, fueling curiosity among those eager to visit or relocate.
Challenges in the Spotlight
Not all the attention is glowing. Foreign media and rights groups have zeroed in on Vietnam’s tightening grip on free expression, with “Decree 147” sparking debate. The new social media regulations, which give authorities sweeping powers to censor dissent, have been called an “icy stranglehold on free speech” by critics. With half the population relying on platforms for news, this move has foreigners questioning how Vietnam balances its economic openness with political control—a tension that’s as old as its modern history.
On a darker note, a recent tragedy—a British-South African couple’s death linked to tainted alcohol—has raised safety concerns among travelers. The arrest of a bartender in this case underscores Vietnam’s efforts to address such incidents, but it’s a reminder that rapid growth can bring growing pains.
Why Vietnam Matters Now
For foreigners, Vietnam in 2025 is a tapestry of opportunity and complexity. Investors see a frontier market with untapped potential; tourists see a cultural gem; and analysts see a nation deftly navigating a shifting world order. Whether it’s the promise of AI breakthroughs, the drama of trade wars, or the charm of pho-filled streets, Vietnam’s story is resonating far beyond its borders. As one foreign observer put it online: “Vietnam’s not just on the map—it’s redrawing it.” And right now, the world can’t look away.
Vietnam’s rapidly growing economy, strategic location, and favorable investment policies make it an attractive destination for foreign entrepreneurs. However, navigating the legal and administrative processes to establish a business can be complex.
This guide outlines the essential steps, requirements, and considerations for foreign investors looking to register a company in Vietnam.
1. Overview of the Registration Process
The process involves two key certificates:
Investment Registration Certificate (IRC): Government approval for your investment project.
Enterprise Registration Certificate (ERC): Legal recognition of your business entity.
Foreign investors must obtain the IRC before applying for the ERC. Engaging a local lawyer is highly recommended to ensure compliance with regulations.
2. Types of Business Structures
Choose a structure aligned with your business goals:
Limited Liability Company (LLC): Popular for SMEs. Owners (members) have liability limited to their capital contribution.
Joint Stock Company (JSC):** Suitable for large-scale ventures. Capital is divided into shares, allowing equity fundraising.
Representative Office: Acts as a liaison for market research but cannot generate revenue.
3. Required Documentation
Prepare the following (translated into Vietnamese and notarized):
Company charter/bylaws outlining governance and operations.
Shareholder/passport copies (for individuals) or incorporation certificates (for corporate entities).
Detailed business plan, including investment capital and objectives.
Lease agreement or proof of office address in Vietnam.
4. Step-by-Step Registration Process
Step 1: Choose a Company Structure: Consider factors like liability, scalability, and industry requirements. For example, an LLC is ideal for controlled ownership, while a JSC suits public fundraising.
Step 2: Prepare Documents: Ensure all foreign documents are translated and notarized. A lawyer can draft the company charter and validate compliance.
Step 3: Apply for the Investment Registration Certificate (IRC): Submit the IRC application to the Department of Planning and Investment (DPI). The review typically takes 15–30 days. The IRC confirms approval for your project’s scope and location.
Step 4: Obtain the Enterprise Registration Certificate (ERC)**
After IRC approval, file for the ERC with the DPI. This certifies your company’s legal existence and includes your tax ID. Processing usually takes 5–10 working days.
Step 5: Open a Corporate Bank Account: Deposit initial capital into a Vietnamese bank account using your ERC. This is mandatory for operational transactions.
5. Legal Considerations and the Role of a Lawyer
Vietnam’s regulatory environment can be challenging due to:
Sector Restrictions: Some industries (e.g., media, banking) limit foreign ownership.
Tax Compliance: VAT, corporate income tax, and transfer pricing rules apply.
Labor Laws: Regulations on contracts, wages, and social insurance must be followed.
A local lawyer assists with:
Drafting legally sound documents.
Navigating sector-specific requirements.
Ensuring timely submissions to avoid penalties.
6. Post-Registration Requirements
After incorporation:
Register for taxes (VAT, corporate income tax) with the tax authority.
Obtain industry-specific licenses (e.g., for tourism, construction).
Display business licenses at your office.
File annual financial reports and audits.
7. Conclusion
Registering a company in Vietnam requires meticulous preparation and adherence to regulatory steps. While the process is structured, challenges like language barriers and evolving laws highlight the need for professional legal support. By securing an IRC, ERC, and partnering with experts, foreign investors can efficiently establish their presence and tap into Vietnam’s dynamic market.
For tailored advice, consult a licensed Vietnamese legal firm to streamline your journey from registration to operational success.
The weak yen is turning seemingly cheap products in Japan into luxuries for ordinary workers.
Recently, The Economist’s Big Mac Index, an index that measures exchange rates through McDonald’s Big Mac hamburgers, surprised many people.
Specifically, the salary of Japanese workers for 1 hour of work in a restaurant or retail store is only enough to buy 2.18 Big Mac hamburgers, much lower than the figure of 3.95 in Australia. The figure in Japan has also decreased by 0.2 hamburgers compared to 5 years ago because wages increase more slowly than inflation.
The weak yen, which hit a 37-year low in 2024, is hurting many workers in Japan.
Number of Big Mac hamburgers that workers in different countries can buy through their hourly wages
Big Mac Index
It is often difficult to compare economic data accurately across borders due to constantly fluctuating exchange rates and differences in working environments. Therefore, economists often compare the price of the same item that is widely used in many countries as an index, such as McDonald’s Big Mac hamburgers, lipstick, or even many other common goods as a standard measure.
Back to the Japan story, Nikkei Asian Review said they used data from Indeed, a US global job website, to calculate hourly wages for employees of 22 global restaurant and retail chains including McDonald’s.
At the same time, Nikkei used local Big Mac prices published by The Economist in the UK to calculate the number of Big Mac hamburgers that workers can buy for an hour of work in their country or region.
According to The Economist, the price of a Big Mac is $3.20 in Japan as of July 2024, nearly 50% lower than in the US and UK, thereby creating the general impression that this type of food in Japan is relatively cheap.
However, according to economist Yusuke Aoki at Indeed Japan, if you look closely, it is becoming increasingly difficult for Japanese workers to buy this type of food as the Yen weakens and wages cannot keep up with inflation.
Specifically, over the past five years, the price of a Big Mac hamburger has increased by 23% in Japan, but hourly wages for workers have only increased by 11%.
Japanese workers’ wages have been virtually flat since the economy saw a property bubble burst in the 1990s, triggering a prolonged period of deflation.
Hourly wages in USD by country
However, the Covid-19 pandemic and a series of geopolitical fluctuations are causing prices of goods and services to rise, leading to inflation rising faster than wages.
To make matters worse, the Bank of Japan (BoJ) has cut interest rates to negative levels to stimulate the economy, and while exporters have benefited, shareholders have instead hoarded assets instead of raising wages, further exacerbating the problem.
“Service industry wages are quite stable now, so pay raises are rare and if they do happen, they are only around 10-20 yen, equivalent to 0.065-0.13 USSD,” said a worker at a McDonald’s restaurant in Tokyo’s bustling Ginza district.
In US dollars, the average Japanese worker will earn only $7 an hour in 2024, down from $8.6 an hour in 2019.
Even hourly wages in Japan have fallen below those of its Asian neighbors such as Singapore and South Korea due to the sharp depreciation of the Yen against the US dollar.
As the yen hit a 37-year low against the dollar in 2024, major brands like Toyota Motor reported record profits and stocks surged to record highs.
But for the Japanese people, the weak yen does nothing more than increase the cost of living.
Highest 33 years
The latest data from the Japanese Ministry of Health and Labor shows that in 2024, the average monthly income of a Japanese salaryman is 348,182 yen, an increase of 2.9% compared to 2023 and the highest increase in the past 33 years.
However, Japanese people are not happy because with an average price increase of 3.2%, the real income of a Japanese worker has decreased by 0.2%.
This is also the third consecutive year that the real income of Japanese people has fallen year after year.
Official figures show Japan’s economy picking up speed by the end of 2024, but adjusted for inflation, it grew just 0.1% last year, down from 1.5% the year before.
Official data showed that household spending in Japan fell slightly in 2024, reversing the upward trend in the previous three years.
In contrast to the US, where strong consumption could revive the economy after the Covid-19 pandemic, persistently weak demand in Japan is causing GDP to stagnate.
Worse, with the tariffs that President Donald Trump has imposed on trading partners including Japan, the Yen is likely to continue to depreciate against the USD, further fueling inflation, putting pressure on the people.
In the context of factories moving abroad, a low Yen cannot fully exploit its advantages.
Japan, on the other hand, is increasingly reliant on imports, including fuels such as coal and gas used to generate electricity. Since Japan shut down most of its nuclear power plants following the Fukushima disaster in 2011, imports account for about 90 percent of its total energy supply. The country also spends more on imported agricultural products than it produces domestically.
A survey in December 2024 found that 60% of Japanese households said their economic situation was worse than a year ago, and only 4% said it had improved. As a result, consumer confidence in Japan is now much lower than before the Covid-19 pandemic.
One of President Donald Trump’s first acts after taking office was to impose additional tariffs on Chinese imports. Beijing immediately responded by imposing tariffs on US energy imports. Now the entire US industry is being shaken up.
Beijing imposed import tariffs of 15% on US coal and liquefied natural gas and 10% on crude oil earlier this month, shortly after Mr Trump imposed an additional 10% tariff on all imports from China.
China has only targeted energy imports because they are easy targets, even though oil and LNG make up only a small portion of China’s total imports.
The impact of Beijing and Washington’s tariffs is being felt immediately. Chinese energy traders have begun diverting LNG shipments to Europe. US crude oil exports to China will also be affected by the 10% tariff. However, some experts say the impact of the tariff “war” is most pronounced in the coal industry.
According to Clyde Russell, a writer for Reuters’ Asia commodities and energy section, US crude accounts for just 2% of China’s total crude imports, and LNG from Washington accounts for just 5%. Coal, however, is a different matter entirely.
The market is largely focused on the US’s position as the world’s largest producer of oil and gas and one of the top 10 exporters of these commodities. The US is also a major exporter of coal, shipping the material to more than 70 countries. As of 2023, China is the 5th largest importer of US coal, accounting for 6.46% of total exports. As of the third quarter of 2024, China received 3.675 million tons of US coal, making it the 2nd largest retail buyer of US coal after India.
That could now change as China looks elsewhere for tariff-free coal supplies and the US turns to its biggest customer, India. Earlier this month, Reuters quoted US government officials as saying they expected coal export flows to change, noting the trend could reduce Australia’s share of China’s coal import market.
Coking coal is a particularly hard hit export. Coking coal is used to make steel and the US exports a lot to China. Last year, US coking coal exports to China increased by about 33% to $1.84 billion, according to Reuters. Coal exports to India have also increased as the country seeks to diversify its supply away from its top supplier, Australia.
Russell said U.S. coal exporters could try to maintain market share in China by offering discounts. They could also pivot to India as China looks to other sources such as Mongolia and Russia. Chinese media reported that Mongolia will increase coal exports to the mainland by 20 percent this year, aiming to increase its total export capacity to 165 million tons.
However, Russia may not be a viable option after Russian coal exports to China fell sharply last year. According to Reuters, Russian coal is less competitive due to high production costs and a lack of rail capacity. That is, just as the US has few options for alternative export destinations, China has few options for alternative suppliers.
Canada is an exporter that could benefit from the tariff “war” like Australia, which could regain market share in China as US coal is diverted to India.
If China shifts to buying more Australian and possibly Canadian coking coal, it is likely that Australian coal prices will become more competitive with US prices, especially as US producers struggle to find replacement buyers for shipments that have been sent to China.
