US Countervailing Duty Of 46% "Strikes A Blow" To Vietnam's Wood And Textile Industries - Businesses Hold Emergency Meeting

Following the news that the United States has officially imposed a countervailing duty of up to 46% on goods imported from Vietnam, the business community and industry associations quickly organized emergency meetings to seek measures to minimize potential damage.

Detailed Analysis Of The New Us Tax Policy And Its Impact

On April 2nd, US President Donald Trump announced a new tariff policy, a move he called “Liberation Day,” marking the moment the US “reclaims economic sovereignty.” According to this policy, from April 5th, a basic tariff of 10% will be applied to all goods imported from trade partners.

Notably, starting from April 9th, the US will apply a higher “reciprocal” tariff to more than 60 countries that it considers to be causing trade imbalances. Among these, Vietnam faces a countervailing duty of up to 46%, alongside China (34%).

Sharing his views on this policy on his personal page, Ambassador Hoang Anh Tuan, Vietnamese Consul General in San Francisco (USA), believes that the imposition of tariffs is a “leverage” that the US is using to force other countries to accept trade terms that benefit them, instead of relying on multilateral mechanisms as before.

This new tax policy is seen as part of the Trump administration’s efforts to reduce the US trade deficit, which reached a record high of $1.2 trillion in 2024. The ultimate goal is to reposition the US role in global trade.

A special feature of this policy is that it not only includes tariffs but also combines non-tariff barriers and accusations of currency manipulation policies that the US believes some countries are applying to US goods.

Although the tax rate has increased sharply and suddenly, President Trump calls this “reciprocal” tax “friendly.” He explained that the US has only applied 50% of the tax calculated according to a complex formula by the US Treasury Department, in order to create “flexible room” for future negotiations.

Ambassador Hoang Anh Tuan also said that the new US tax calculation formula is based on the bilateral trade deficit ratio, instead of tariffs on individual industries. For example, with Vietnam, the bilateral trade deficit ratio is 90%, while with China it is 54%.

This new tax rate is predicted to cause significant disruptions to the global supply chain, while also encouraging countries and businesses to move towards localizing production, changing the free trade trend that has existed for many years.

This is also the first time in history that the Trump administration has used the IEEPA Act of 1977 to declare a national economic emergency, eliminate multilateral mechanisms, and take unilateral actions decisively.

Reactions And Impacts On Vietnamese Industries

The 46% countervailing duty that the US applies to Vietnamese goods is expected to have a significant impact on the country’s key economic sectors, especially the textile and wood industries. These are two industries with very large export turnover to the US.

Immediately after the news of the new tax rate was announced, a series of industries in Vietnam such as furniture, textiles, electronics components, and seafood have suffered negative impacts.

In 2024, the total export value of wood and wood products from Vietnam reached over $16.2 billion, of which the US remains the largest export market, accounting for 56% of the total turnover, equivalent to over $9.1 billion. Meanwhile, Vietnam only imported about $380 million worth of wood materials from the US, showing a large imbalance in the trade balance. Mr. Ngo Chon Tri, Operations Director of Yes4All furniture exporter, said that the company held an emergency meeting overnight to discuss the tax issue and will continue to verify information from various sources to get the most accurate picture.

The US is also a key export market for Vietnam’s textile industry, with a turnover of over $10 billion in 2024, accounting for 40% of the total export value. Thanks to this, Vietnam has risen to become the second largest textile exporter in the world, after China. Mr. Pham Xuan Hong, Chairman of the Ho Chi Minh City Textile and Embroidery Association, said that the Association has also planned to meet with members this morning to exchange accurate information about the new tax rate and make appropriate recommendations and proposals.

Detailed Countervailing Duty Calculation Formula According To CNBC

According to CNBC, the Trump administration uses the following countervailing duty calculation formula:

Tariff = Bilateral Trade Deficit / Total Value of Imports from that Country

For example, with Vietnam, exports to the US reached $136.6 billion, imports were $13.1 billion, resulting in a deficit of $123.5 billion. This deficit ratio is equivalent to 90% of the total value of imports and exports, and the US believes this is the “tax” that Vietnam is “imposing” on US goods. Therefore, the US imposes a tariff of 46%, which is half the level calculated according to this formula.

This formula reflects the US perspective on the extent of the trade imbalance, not based on the nominal tariffs that countries announce.

Conclusion

The 46% countervailing duty that the US applies to Vietnamese goods is posing many major challenges for businesses, especially in the wood and textile industries. Emergency meetings and efforts to find solutions are being carried out urgently to minimize the negative impacts on the Vietnamese economy.