VIETNAM'S INTERNATIONAL TRADE POLICY: OPPORTUNITIES AND CHALLENGES

AMID THE US-CHINA TRADE WAR

Abstract:
The escalation of the US‑China trade war has not only reconfigured global economic and technological
alliances but also created new opportunities and challenges for Vietnam. With multinational corporations
seeking alternatives to bypass high tariffs on Chinese goods, Vietnam has emerged as an attractive
destination for foreign direct investment (FDI) and manufacturing relocation. This study examines the
evolution of Vietnam’s trade policy from 2018 onward by analyzing trade flows, FDI trends, and
government policy adjustments. Employing a qualitative approach based on secondary data analysis and
comparative evaluation, the paper outlines Vietnam’s strategic advantages—such as a competitive labor
market, strategic geographic location, and extensive free trade agreements (FTAs)—while addressing
critical challenges like infrastructural bottlenecks, regulatory complexities, and market overdependence.
Policy recommendations are provided to enhance industrial capacity, diversify export markets, and
support sustainable economic growth in an era of global trade tensions.

Keywords: International trade, US‑China trade war, Vietnam, FDI, trade policy, supply chain
diversification.

____________________________________________________________________________________

Introduction

The dynamics of global trade have been dramatically reshaped by the ongoing US‑China trade war. As the
two largest economies engage in tariff escalations and strategic decoupling, the repercussions have
cascaded throughout international supply chains. Vietnam has experienced a rapid transformation in its
role on the global stage, emerging as a favored destination for multinational corporations seeking to
relocate production away from China. This paper investigates Vietnam’s evolving international trade
policy amid these geopolitical shifts.

The study’s significance lies in its exploration of how Vietnam’s strategic policy measures have facilitated
rapid export growth and attracted substantial FDI while also exposing vulnerabilities inherent in an
overreliance on specific markets. By reviewing recent literature, analyzing trade statistics, and comparing
policy frameworks from the pre‑ and post‑trade war periods, this paper provides critical insights for
policymakers, business leaders, and investors navigating the complexities of an increasingly
interconnected global economy.

Research Questions:

●​ How has Vietnam’s trade policy evolved in response to the US‑China trade war?
●​ What are the principal opportunities that have arisen from supply chain diversification?
●​ What challenges remain, and what policy measures are necessary to secure long‑term economic
stability?
1. Literature review

1.1 Previous Research

A robust body of literature documents how US tariffs on Chinese products have forced a reorganization of
global production networks. The International Monetary Fund (Rotunno, 2024) argues that tariffs as high
as 25% on key Chinese exports have compelled multinational companies to seek lower‑cost production
bases elsewhere. Concurrently, Petri and Plummer (2020) assert that such shifts have accelerated the
“China+1” strategy in which Vietnam, India, and Mexico are emerging as viable alternatives.

Several studies underscore Vietnam’s increased export performance in key sectors. For example, research
by Yamashita, Thi and Ha (2024) and Phuc (2025) highlights notable export surges in electronics, textiles,
and machinery. However, research conducted at Air University by Kwon (2022) and research by
Mayr-Dorn (2023) also points to critical challenges—such as infrastructural inadequacies and labor
market imbalances—that could undermine long‑term growth if not addressed.

1.2 Research Gaps

While existing research has extensively analyzed export growth and FDI inflows, studies have largely
treated Vietnam’s trade policy challenges and opportunities as separate, isolated aspects. Few works offer
a comprehensive, integrated analysis that examines the dynamic interplay between policy evolution,
infrastructure development, and market diversification. This study will differ from the literature in several
aspects:

Firstly, this study synthesizes both the pre and post‑trade war policy frameworks, providing a
comprehensive timeline of how Vietnam’s trade policies have transformed in response to shifting global
dynamics.

Secondly, it examines the interdependencies between key elements such as infrastructure development,
regulatory reforms, and market diversification, highlighting how these factors interact to shape the overall
trade environment.

Thirdly, the study offers actionable policy recommendations derived from a comparative analysis of these
interlinked factors, drawing on both domestic experiences and international best practices.

By integrating these elements, the present research seeks to deliver a comprehensive evaluation of
Vietnam’s trade policy trajectory during an era of heightened geopolitical tension, ultimately guiding
more effective and adaptive future strategies.

●​ International Monetary Fund. (2024). Trade Policy and Jobs in Vietnam: The Unintended
Consequences of US-China Trade Tensions. → Rotunno, L. (2024). Trade Policy and
Jobs in Vietnam: The Unintended Consequences of US-China Trade Tensions. IMF,
2024(263). Available at:
 https://www.imf.org/en/Publications/WP/Issues/2024/12/23/Trade-Policy-and-Jobs-in-Viet
nam-The-Unintended-Consequences-of-US-China-Trade-Tensions-559698.
●​ Economic Research Institute for ASEAN and East Asia. (2024). The Third-Country Effect
of the US-China Trade War on Vietnam. → Yamashita, N., Thi, D. and Ha, T. (2024). The
Third-country Effect of the United States-China Trade War on Viet Nam. Available at:
https://www.eria.org/uploads/The-Third-country-Effect-of-the-United-States-China-Trade-
War-on-Viet-Nam.pdf.
●​ ISEAS–Yusof Ishak Institute. (2019). Vietnam and the US-China Trade War: Navigating
Opportunities and Risks. → Ha, L. and Duc Phuc, N. (2019). The US-China Trade War:
Impact on Vietnam. Available at:
https://www.iseas.edu.sg/wp-content/uploads/pdfs/ISEAS_Perspective_2019_102.pdf.
●​ Journal of Trade Studies. (2024). Vietnam’s Export Growth Amid US-China Trade
Tensions. → Phuc, V. (2025). Vietnam’s export strategy amid global trade tensions.
SGGP English Edition. Available at:
https://en.sggp.org.vn/vietnams-export-strategy-amid-global-trade-tensions-post115621.
html.
●​ Air University, Journal of Indo-Pacific Affairs. (2022). The US-China Trade War:
Vietnam’s Role and Challenges. → Kwon, E. (2022). The US-China Trade War Vietnam
Emerges as the Greatest Winner. JOURNAL OF INDO-PACIFIC AFFAIRS. Available at:
https://media.defense.gov/2022/Jul/31/2003046339/-1/-1/1/17%20KWON_COMMENTA
RY.PDF.
●​ Trinity College Dublin. (2023). Labor Market Effects of US-China Trade Disruptions in
Vietnam. → Mayr-Dorn, K., Narciso, G., Duc, A., Dang, H. and Phan (2023). Trade
diversion and labor market adjustment: Vietnam and the U.S.-China trade war. Available
at: https://www.tcd.ie/Economics/TEP/2023/TEP0923.pdf.

2. Overview of the Implications of the US-China Trade War and Vietnam's Strategic Position in
Global Trade

2.1 Overview of US‑China Trade War and Its Implications for Global Trade
The escalation of the US‑China trade war in 2018 reshaped the global economic landscape, setting off a
cascade of changes that reached far beyond the borders of the two largest economies. Initially sparked by
disputes over trade deficits, intellectual property, and market access, the conflict soon evolved into a
broader contest for technological supremacy and global influence. This transformation has profound
implications for international trade—altering supply chains, reshuffling economic alliances, and
redefining competitive advantages across regions.
Key Highlights:
-​ Reshaping Global Supply Chains:
The imposition of tariffs, sometimes as high as 25%, forced multinational companies to reconsider their
production strategies. The traditional reliance on China as the manufacturing hub has given way to
diversified “China+1” models, with countries like Vietnam, India, and Mexico emerging as viable
alternatives. For Vietnam, this shift offers a strategic opportunity to capture greater foreign direct
investment and integrate more deeply into global supply networks (Freeman, 2020; World Bank, 2020).
-​ Technological and Economic Decoupling:
Beyond the physical movement of factories, the trade war has instigated a decoupling in high-tech sectors.
US restrictions on Chinese firms in areas such as semiconductors, 5G, and artificial intelligence have led
to the formation of two parallel technological ecosystems. This division not only intensifies global
competition but also encourages nations to invest in self-reliance and domestic innovation—a trend that
has important implications for global trade dynamics (Petri & Plummer, 2020).
-​ Global Economic Repercussions:
The economic fallout of the trade war has been far-reaching. The International Monetary Fund estimated
that the conflict contributed to a reduction in global GDP by roughly $700 billion, underscoring the
interconnectedness of modern economies. Volatile currency markets and fluctuating investor confidence
have further complicated the economic environment, creating both risks and opportunities for emerging
markets like Vietnam (IMF, 2019; Reuters, 2019).

As the US and China continue to navigate their strategic rivalry, the ripple effects of their policies compel
countries worldwide to adapt. For Vietnam, this evolving scenario is a double-edged sword: while it
presents avenues for growth through supply chain diversification and deeper integration into regional
trade agreements, it also demands vigilance against the vulnerabilities inherent in a highly globalized
economy.
In the context of Vietnam's international trade policy, the challenges and opportunities emerging from the
US‑China trade war provide a critical backdrop. As global trade structures realign, Vietnam’s ability to
leverage its strategic advantages will be crucial in shaping a resilient and dynamic trade policy for the
future.

2.2 Vietnam’s Strategic Position in Global Trade and Trade Policy Framework

Vietnam’s rapid integration into global value chains can be attributed to several interrelated factors that
have positioned the country as an emerging manufacturing powerhouse. Firstly, the competitive labor
market plays a crucial role. Vietnam’s relatively low labor costs have not only attracted labor-intensive
manufacturing operations but have also encouraged companies to shift production to take advantage of
cost efficiencies without compromising on quality. Over time, improvements in workforce skills and
education have further enhanced the country's attractiveness for higher value-added activities, solidifying
its position in global supply chains.

Secondly, Vietnam’s strategic geographic location offers significant logistical advantages. Situated in the
heart of Southeast Asia, the country benefits from proximity to major shipping routes and key regional
markets. This advantageous positioning reduces transportation costs and delivery times, making it easier
for businesses to integrate their supply chains across borders. The connectivity provided by its
well-placed ports and growing infrastructure further supports the efficient movement of goods, bolstering
its role as a vital link in global trade.

Thirdly, an extensive network of free trade agreements has been instrumental in accelerating Vietnam’s
global economic integration. By actively participating in key agreements such as the Comprehensive and
Progressive Agreement for Trans-Pacific Partnership (CPTPP), the EU‑Vietnam Free Trade Agreement
(EVFTA), and the Regional Comprehensive Economic Partnership (RCEP), Vietnam has secured
substantial tariff reductions and expanded market access. These agreements have not only facilitated
increased export volumes but also attracted significant foreign investment, embedding the nation more
deeply within the global economic framework.

Fourthly, proactive policy reforms have further accelerated Vietnam’s integration into global value chains.
In response to challenges such as the U.S.-China trade war, the Vietnamese government has strengthened
its trade compliance measures and overhauled regulatory frameworks to ensure greater trade credibility.
By addressing risks like transshipment practices and aligning domestic policies with international
standards, Vietnam has enhanced its reputation as a reliable trading partner, thereby attracting more
high-tech and quality-sensitive investments.

Despite these significant advantages, Vietnam continues to face challenges that could impede its
sustainable growth. Overdependence on a few major export markets, infrastructural limitations, and
complex regulatory landscapes present ongoing hurdles. Addressing these issues through further
investment in infrastructure, diversification of export destinations, and continual refinement of regulatory
practices will be critical for Vietnam to maintain its competitive edge and ensure long-term economic
stability.

3. Analysis of Vietnam’s Trade Policy: Pre- and Post-U.S.-China Trade War

3.1 Vietnam’s Trade Policy Before the U.S.-China Trade War (Pre-2018)

3.1.1 Export-Oriented Growth

Before the trade war, Vietnam pursued an open trade policy with a strong emphasis on export-driven
economic growth. The country had been a member of the World Trade Organization (WTO) since 2007
and had positioned itself as a competitive manufacturing hub, particularly in textiles, electronics, and
agriculture (Vu, 2022).

Fig. 1. The proportion of Vietnam’s exports to different markets in 2009 and 2022.

(Thuy Anh Chu Tu, Thi Mai Phuong Chu, and Thi Lan Huong Truong, 'Impacts of the US-China Trade
Tension and RCEP on Vietnam-China Trade Balance', Russian Journal of Vietnamese Studies, 8.1 (2024),
38–51, available at: https://www.vietnamjournal.ru/2618-9453/article/view/626487 [accessed 14 March
2025].)

3.1.2 Free Trade Agreements (FTAs) and Market Expansion

Vietnam actively engaged in regional and bilateral trade agreements to enhance its trade competitiveness.
Notable agreements included the ASEAN Free Trade Area (AFTA) and multiple bilateral trade deals with
key partners like the United States, Japan, and South Korea. The signing of the Comprehensive and
Progressive Agreement for Trans-Pacific Partnership (CPTPP) in 2018 and negotiations for the European
Union-Vietnam Free Trade Agreement (EVFTA) reinforced Vietnam’s commitment to global trade
liberalization (ISEAS – Yusof Ishak Institute, 2019).

3.1.3 Trade Relations with China

China was Vietnam’s largest trading partner and a crucial supplier of raw materials and intermediate
goods. However, this trade relationship created a structural trade deficit for Vietnam, as the country
remained dependent on Chinese imports for its export-oriented manufacturing sector (Hoang, 2019).
Despite these dependencies, Vietnam sought to balance its trade relations by fostering stronger economic
ties with the U.S. and other major trading partners.

Fig. 2. Value (in billion USD) and growth rate of export to China from 2009 to 2022.

(Thuy Anh Chu Tu, Thi Mai Phuong Chu, and Thi Lan Huong Truong, 'Impacts of the US-China Trade
Tension and RCEP on Vietnam-China Trade Balance', Russian Journal of Vietnamese Studies, 8.1
(2024), 38–51, available at: https://www.vietnamjournal.ru/2618-9453/article/view/626487 .)

3.1.4 Foreign Direct Investment (FDI) and Industrial Development

Vietnam's strategic location, competitive labor costs, and favorable investment policies attracted
substantial FDI inflows. However, competition from China, India, and other ASEAN economies limited
Vietnam’s ability to become a primary alternative to China as a global manufacturing hub before the trade
war (Air University, 2023).

3.2 Vietnam’s Trade Policy After the U.S.-China Trade War (2018-Present)

Vietnam’s trade policy has undergone significant adjustments in response to shifts in global trade patterns.
As multinational corporations sought alternative manufacturing locations, Vietnam emerged as a key
player in international trade. The country leveraged its strategic position by attracting foreign direct
investment (FDI), diversifying trade relationships, and strengthening trade compliance measures.

3.2.1 Expansion of Export Markets

In recent years, Vietnam has experienced substantial growth in exports, particularly in industries such as
electronics, textiles, and furniture. Companies looking to expand their manufacturing operations have
increasingly turned to Vietnam due to its competitive labor costs and improving infrastructure (Nguyen,
2024). The country’s exports to major economies have steadily increased, driven by favorable trade
agreements and business-friendly policies.

To facilitate this growth, the Vietnamese government introduced streamlined customs procedures and
enhanced logistics networks. The expansion of key industrial zones and ports further supported the rising
volume of exports. While this export boom contributed positively to Vietnam’s economy, it also presented
regulatory challenges that required careful management to ensure trade compliance.

Year Export Value (USD Year-on-Year Growth (%)

Billion)

2018 243.48 13.2

2019 264.19 8.4

2020 282.65 7.0

2021 305.00 7.9

2022 331.00 8.5

2023 365.00 10.3

2024 405.53 11.1

Table 1. Vietnam's export values from 2018 to 2024

(General Statistics Office of Vietnam, Import and Export Statistics, available at:
https://www.gso.gov.vn/en/import-export/ [accessed 10 March 2025].)
3.2.2 Surge in Foreign Direct Investment (FDI)

Vietnam has become a prime destination for foreign investment in the manufacturing sector. Major
multinational corporations, including Samsung, Apple, and Intel, have expanded their production facilities
in Vietnam to diversify their supply chains and enhance operational resilience (Tran, 2022).

To attract and sustain FDI, the Vietnamese government implemented various incentives, including
corporate tax breaks, improved infrastructure, and investment-friendly policies. Industrial parks in regions
such as Bac Ninh, Hai Phong, and Binh Duong have been expanded to accommodate the influx of foreign
enterprises. These developments have not only boosted economic growth but also created new
employment opportunities across various industries.

However, the rapid inflow of FDI also brought challenges, including increased competition for skilled
labor and rising wages in key industrial zones. The government has responded by investing in workforce
training programs to enhance the skill level of the domestic labor force, ensuring Vietnam remains an
attractive destination for long-term investment.

Year FDI Inflows (USD Billion) Year-on-Year Growth (%)

2018 19.10 9.1

2019 20.38 6.7

2020 20.00 -1.9

2021 19.74 -1.3

2022 22.56 14.3

2023 23.31 3.3

2024 24.50 5.1

Table 2. Vietnam's FDI inflows from 2018 to 2024

(Ministry of Planning and Investment of Vietnam, Report on Foreign Direct Investment, available at:
https://www.mpi.gov.vn/en/Pages/Report-on-Foreign-Direct-Investment-1740.aspx [accessed 10 March
2025].)

3.2.3 Strengthening Trade Compliance and Regulatory Measures

With Vietnam’s growing role in global trade, the government has taken steps to enhance trade compliance
and maintain strong economic relationships with its partners. Stricter rules of origin enforcement and
increased customs inspections have been implemented to ensure transparency and adherence to
international trade regulations (Park & Lee, 2023).

These regulatory improvements help safeguard Vietnam’s trade credibility and protect against potential
disruptions in its export markets. The government continues to work closely with international partners to
reinforce compliance frameworks and uphold fair trade practices.

3.2.4 Trade Diversification and Supply Chain Resilience

Vietnam has actively pursued trade diversification strategies to expand its economic partnerships and
reduce reliance on a limited number of trading partners. The implementation of the European
Union-Vietnam Free Trade Agreement (EVFTA) in 2020 and participation in the Regional
Comprehensive Economic Partnership (RCEP) in 2022 have strengthened trade relations with the
European Union, Japan, and ASEAN countries (Vu, 2022).

By fostering a more diversified trade network, Vietnam has been able to mitigate risks associated with
supply chain disruptions. The government has also promoted domestic production of essential materials
and intermediate goods to enhance supply chain resilience. These initiatives are designed to support
long-term economic stability and ensure continued growth in Vietnam’s export sector.

3.2.5 Currency and Trade Balance Considerations

Vietnam’s trade surplus with major economies has led to discussions about currency valuation and
exchange rate policies. In response, the State Bank of Vietnam has taken steps to maintain exchange rate
stability while ensuring that monetary policies align with international economic standards (IMF, 2024).

The government has also introduced measures to balance trade relations with multiple partners,
encouraging businesses to explore diverse markets and reduce dependency on any single economy. These
efforts have helped strengthen Vietnam’s financial position and support long-term economic
sustainability.

Conclusion

Vietnam’s trade policy in recent years has been characterized by increasing exports, rising foreign direct
investment, and expanding trade agreements. By prioritizing regulatory compliance, trade diversification,
and infrastructure development, Vietnam has positioned itself as a key player in the global economy.
Moving forward, continued investments in workforce development and supply chain resilience will be
essential to sustaining Vietnam’s economic growth and international trade partnerships.

3.3 General Assessment: Trade Policy Evolution Before and After the U.S.-China Trade War

3.3.1 Before the U.S.-China Trade War

Before the trade war, Vietnam’s trade policy was characterized by a robust export-led growth strategy
anchored in its active participation in the World Trade Organization and multiple free trade agreements.
The country leveraged its competitive manufacturing sectors—particularly in textiles, electronics, and
agriculture—to drive market expansion and attract substantial foreign direct investment. Vietnam’s
strategic reliance on China for raw materials and intermediate goods helped sustain its manufacturing
base, though it also led to a structural trade imbalance. This period was marked by steady economic
growth as Vietnam worked to position itself as a reliable player in global supply chains, setting the stage
for further transformation.

3.3.2 After the U.S.-China Trade War:

The onset of the U.S.-China trade war triggered significant shifts in global supply chains, compelling
Vietnam to adapt rapidly. As companies sought alternatives to Chinese production in order to bypass
tariffs, Vietnam emerged as a favored destination for manufacturing, resulting in a marked surge in
exports, particularly to the U.S. In response, the Vietnamese government enhanced trade compliance
measures and diversified its trade partnerships, reducing its overreliance on China. Increased foreign
direct investment from multinational corporations further accelerated industrial growth, even as new
challenges such as currency management and trade balance pressures emerged. Overall, this period
reflects a dynamic recalibration of trade policy aimed at maintaining competitiveness amid evolving
global economic conditions.

4. Opportunities and Challenges: Navigating Vietnam’s Trade Policy Amid the U.S.-China Trade
War
Amid the U.S.-China trade war, Vietnam's trade policy faces both opportunities and challenges. Tensions
between the two economic giants create opportunities to attract investment and expand export markets.
However, Vietnam also faces risks from trade protectionism and supply chain disruptions. This situation
requires flexible and adaptive policies to maximize advantages and minimize risks. Developing an
appropriate trade strategy will determine Vietnam’s sustainable economic growth. There are numerous
opportunities for Vietnam’s trade policy, particularly in attracting investment and expanding markets.
Effectively leveraging these opportunities will enhance Vietnam’s position in the global supply chain.

4.1 Opportunities for Vietnam’s Trade Policy

Vietnam's evolving trade landscape has been shaped by a series of strategic initiatives aimed at
capitalizing on global shifts and mitigating risks arising from geopolitical tensions. The country's
approach can be understood in four key segments.

Firstly, export growth has been bolstered by supply chain substitution and market expansion. As the U.S.
increased tariffs on Chinese goods, American businesses actively sought alternative suppliers, creating a
significant opportunity for Vietnam to emerge as a key manufacturing hub. In 2019, Vietnam’s exports to
the U.S. surged by 35.6%, reaching $66.6 billion, with sectors such as electronics, textiles, footwear, and
furniture experiencing notable gains. Beyond the U.S., Western countries are reducing their reliance on
Chinese products, which, coupled with free trade agreements like the EU-Vietnam Free Trade Agreement
(EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), has
enabled Vietnam to broaden its market reach and diversify its export portfolio.

Secondly, attracting foreign direct investment (FDI) has been a pivotal part of Vietnam’s strategy. As
global businesses seek to reduce their dependence on China, many are relocating production to Southeast
Asia, with Vietnam emerging as a top destination due to its competitive labor costs, strategic location, and
pro-investment policies. In 2023, the country attracted $36.6 billion in FDI, largely directed toward
manufacturing and high-tech industries. This trend is further supported by increased investments in
industrial zones, where regions like Bắc Ninh, Bình Dương, and Đồng Nai have become hubs for major
global brands, reinforcing Vietnam’s role in global supply chains.

Thirdly, promoting economic and trade reforms is critical for sustaining long-term growth. Vietnam
continues to enhance its competitiveness by streamlining administrative procedures, upgrading
infrastructure, and improving workforce quality. Significant investments in projects such as the
North-South Expressway and deep-sea ports are facilitating smoother trade logistics. Additionally, efforts
to deepen integration into global value chains—through investments in research and development,
increased local manufacturing content, and initiatives under the National Strategy on Industry 4.0—are
enabling Vietnam to transition from low-value to higher-value production roles.

Fourthly, leveraging free trade agreements (FTAs) has provided Vietnam with substantial competitive
advantages. By signing key agreements such as the EVFTA, CPTPP, and the Regional Comprehensive
Economic Partnership (RCEP), Vietnam has benefited from reduced tariffs, simplified trade procedures,
and expanded market access. These agreements have not only enhanced its export capabilities but also
strengthened its position against other regional exporters, positioning the nation as a dynamic and
competitive player in the global trade arena.

4.2 Challenges for Vietnam’s Trade Policy

Vietnam's economic landscape is evolving rapidly amid the US-China trade war, yet several challenges
remain that must be addressed for long-term stability. This analysis can be structured as follows:

Firstly, overdependence on export markets poses a significant risk. Vietnam’s heavy reliance on the U.S.
as a primary export destination boosted its trade figures following the US-China trade war, with the U.S.
becoming one of its largest trading partners (World Trade Organization, 2023). However, this dependence
also exposes the country to potential disruptions, as evidenced by recent tariffs on products like plywood
and tires (United States Trade Representative, 2023). Additionally, meeting stricter rules of origin under
agreements such as the EU-Vietnam Free Trade Agreement is critical to avoiding further trade barriers. To
mitigate these risks, Vietnam must diversify its export markets, reinforce regional trade ties, and promote
domestic industries.

Secondly, infrastructure and supply chain bottlenecks continue to challenge Vietnam’s manufacturing
growth. Although infrastructure improvements have been made, major ports such as Cat Lai and Hai
Phong are nearing capacity, leading to congestion and higher logistics costs (World Bank, 2023). Limited
rail and road connectivity further weaken Vietnam's competitive edge compared to countries like China.
The COVID-19 pandemic and ongoing geopolitical tensions have also underscored the vulnerability of
relying heavily on imported raw materials. Addressing these issues will require significant investments in
port expansions, enhanced transportation networks, and the development of domestic supply chains.

Thirdly, intellectual property and compliance risks have emerged as critical concerns with Vietnam’s
deepening integration into global supply chains. Despite progress in strengthening its legal framework,
weak enforcement of intellectual property rights remains a hurdle for foreign investors in high-tech and
pharmaceutical sectors (Organisation for Economic Co-operation and Development, 2022). Moreover,
compliance with international trade agreements such as the Comprehensive and Progressive Agreement
for Trans-Pacific Partnership demands stricter labor and environmental standards, with lapses potentially
leading to trade restrictions and diminished investor confidence (United States Trade Representative,
2023). Enhancing legal enforcement and aligning domestic regulations with global standards are essential
steps to mitigate these risks.

5. Recommendations to Strengthen Vietnam's Global Trade Resilience and Economic Stability

To bolster its economic resilience, Vietnam should implement a series of strategic reforms. First, it is
crucial to diversify export markets and enhance trade compliance. Reducing overreliance on the U.S.
market by expanding partnerships with ASEAN, the EU, and other emerging economies will help
mitigate geopolitical risks. By leveraging existing agreements like the CPTPP and EVFTA—and actively
pursuing new trade pacts—Vietnam can improve market access and shield its economy from external
shocks. Additionally, fostering domestic consumption through incentives for local enterprises will create a
stronger internal market and reduce reliance on exports. Strengthening trade compliance by aligning
domestic policies with WTO and FTA commitments, particularly in labor and environmental standards,
will also ensure stable and favorable trade relations.

Second, upgrading infrastructure and supply chains for long-term growth is crucial. Major investments in
expanding international ports, improving rail and road networks, and promoting digitalization in logistics
will enhance Vietnam’s trade efficiency. Strengthening domestic supply chains by encouraging local
production of key raw materials will reduce import dependency and improve industrial resilience.
Additionally, smart logistics solutions, such as AI-powered freight management and digital customs
procedures, can increase efficiency and reduce costs.

Third, enhancing intellectual property protection and trade defense mechanisms will safeguard Vietnam’s
position in global trade. Strengthening the enforcement of intellectual property rights (IPR) through
stricter penalties and transparent legal frameworks will attract more high-tech and pharmaceutical
investments. Vietnam must also prevent the misuse of its market for tariff evasion by foreign firms,
ensuring compliance with origin rules and avoiding trade sanctions. Proactive trade defense
strategies—such as anti-dumping measures, countervailing duties, and strengthened customs
enforcement—will protect domestic industries from unfair competition and external shocks.

Finally, maintaining balanced trade diplomacy and geopolitical stability is essential for long-term
economic resilience. Strengthening ASEAN economic cooperation will deepen regional integration,
creating a stable trade network that reduces reliance on major global powers. Expanding multilateral ties
with key partners like the U.S., China, Japan, and the EU will not only attract diverse investment sources
but also enhance Vietnam’s bargaining power in trade negotiations. By adopting a flexible trade policy
that prioritizes national economic security while adapting to global shifts, Vietnam can mitigate external
risks and position itself as a competitive and reliable trade partner.

6. Conclusion

The US‑China trade war has catalyzed a profound transformation in global trade, positioning Vietnam as a
key beneficiary in the redistribution of manufacturing and FDI. While Vietnam’s proactive trade policies
have led to impressive gains in export diversification and market expansion, they have also introduced
significant challenges—ranging from infrastructural bottlenecks and regulatory risks to overdependence
on particular markets. This paper has outlined how Vietnam’s trade policy has evolved from a pre‑trade
war focus on export-led growth to a more diversified, resilient, and compliance‑oriented approach.

To maintain its competitive edge and secure sustainable growth, Vietnam must continue to invest in
infrastructure, modernize regulatory frameworks, diversify export markets, and enhance human capital.
By implementing these strategic recommendations, Vietnam can not only consolidate its gains from the
current trade realignment but also prepare for future disruptions in an ever‑changing global economic
landscape.