Vietnam-US Trade Deal: Navigating Tariff Uncertainty for Strategic Gains

The clock is ticking for Vietnam and the U.S. to resolve their trade tensions before the July 2025 deadline, when a threatened 46% tariff on Vietnamese exports could go into effect. With $57 billion in Vietnamese goods shipped to the U.S. in the first five months of 2025—surpassing 2024 levels by 29%—the stakes are high for both economies. A deal would stabilize tariffs, boost Vietnam's manufacturing and tech sectors, and attract foreign investment. But unresolved issues like Vietnam's trade surplus and reliance on Chinese supply chains could derail progress. Here's how investors should position for this high-risk, high-reward scenario.

The Negotiation Landscape: Progress, but Gaps Remain

Recent talks in Washington narrowed gaps across all areas of negotiation, with both sides expressing optimism. However, key sticking points persist:
- Trade Surplus Concerns: The U.S. cites Vietnam's $123.5 billion annual trade surplus (disputed by Vietnam) as justification for tariffs, while Vietnam's May 2025 surplus hit a post-pandemic peak of $12.2 billion.
- China Transshipment Allegations: The U.S. accuses Vietnam of enabling Chinese goods to evade U.S. tariffs, a claim Vietnam denies.
- Market Access: The U.S. seeks reduced non-tariff barriers for agricultural products, energy, and technology, while Vietnam aims to expand its exports of electronics and textiles.

Strategic Sectors to Watch

1. Electronics: The Engine of Growth

Vietnam's electronics sector, driven by foreign direct investment (FDI) from firms like Samsung and Foxconn, is a linchpin of its export economy. A trade deal would protect this sector from punitive tariffs, ensuring continued growth.

Note: Data would show a consistent rise, with 2025 on track to surpass $20 billion.

Investors should look to Vietnam's electronics supply chain, particularly companies involved in semiconductors, printed circuit boards, and consumer electronics. However, risks remain if unresolved transshipment issues lead to retaliatory tariffs.

2. Textiles and Footwear: Vulnerable but Critical

These sectors account for nearly 30% of Vietnam's total exports to the U.S. A deal would alleviate fears of tariffs crippling companies like Viet Nam Textile and Garments Group (Vinatex) and footwear giants like TNG Holdings.

Data would underscore Vietnam's competitive advantage in labor costs and production scale.

Investors might consider Vietnam-based textile firms or U.S. brands reliant on Vietnamese manufacturing, such as Nike or Under Armour, which have significant exposure to the country.

3. Agricultural Exports: A Wild Card

While Vietnam has pledged to boost imports of U.S. agricultural products (soybeans, corn, and meat), its own agro-exports (rice, coffee, seafood) could gain from reduced trade barriers. However, the U.S. may demand stricter oversight of Vietnamese imports to counter alleged Chinese transshipment.

Risks: The China Factor and Non-Tariff Barriers

The U.S. insistence on curbing reliance on Chinese supply chains could pressure Vietnam to restructure its manufacturing base—a costly endeavor for smaller firms. Meanwhile, non-tariff barriers, such as Vietnam's complex import regulations, remain a hurdle for U.S. companies.

Data would show a widening gap, highlighting Vietnam's deep integration into China's supply chain.

Investment Playbook: Balance Opportunity and Risk

• Optimistic Scenario (Deal Reached):
• Manufacturing: Invest in Vietnam's electronics and textiles sectors via ETFs like the MSCI Vietnam Index (VNM) or individual stocks like Masan Group (MSN.HM), a conglomerate with stakes in manufacturing and consumer goods.
• Technology: Back U.S. semiconductor firms like Intel (INTC) or Taiwan Semiconductor Manufacturing (TSM), which rely on Vietnam for assembly.

• Agriculture: Consider U.S. agribusinesses like Archer-Daniels-Midland (ADM) or Tyson Foods (TSN) if Vietnam opens its markets.

• Pessimistic Scenario (No Deal):

• Avoid Vietnam-focused ETFs and stocks exposed to tariffs, such as textiles exporters.
• Shift focus to China or other ASEAN nations less reliant on U.S. trade.

Final Take: A Deal Is Likely, but Risks Persist

With both sides under pressure to avoid economic disruption—a 46% tariff would hit U.S. companies like Apple and Walmart as much as Vietnam—the likelihood of a last-minute agreement remains high. However, investors should demand clarity on China transshipment and non-tariff barriers before committing capital. For now, a cautious overweight in Vietnam's export sectors, paired with stop-loss measures, strikes the right balance between opportunity and risk.

Data sources: Vietnam Ministry of Industry and Trade, U.S. International Trade Commission, and Bloomberg.