(Hanoi, 23rd) The United Nations Development Programme (UNDP) estimates that with the implementation of the US tariff policy starting in August, Vietnam's exports to the US may decrease by up to US$25 billion (about RM105.1 billion), making it the most severely impacted country in Southeast Asia.
The United Nations Development Programme (UNDP) released its first trade volume estimate since the tariffs took effect on September 18. The report shows that, as tariffs drive up prices, total Southeast Asian exports to the US may decrease by 9.7%.
Among them, Vietnam’s potential decline is as high as 19.2%, about twice the Southeast Asian average. According to US trade data, Vietnam was the world's sixth largest exporter to the US last year, with a total export value of US$136.5 billion.
Philip Schellekens, chief economist for UNDP Asia-Pacific, told Reuters that in the worst-case scenario, where tariffs push up US inflation, a 20% US tariff on Vietnamese goods could gradually reduce Vietnam’s exports to the US by more than US$25 billion, accounting for about one-fifth of the annual total. In the Asia-Pacific region, in terms of export value, Vietnam’s impact is second only to China.
Vietnam is the world's second-largest exporter of footwear. According to Vietnam Customs data, since the tariffs took effect on August 7, Vietnam's exports to the US in August have dropped by 2% compared to July, with footwear exports falling by 5.5%.
UNDP predicts that the decline in exports to the US may shrink Vietnam’s domestic GDP by about 5%. The World Bank has already lowered its economic growth forecast for Vietnam this year.
This report has not yet included the potential impact of the 40% US tariff on goods transshipped through Vietnam. If the US strictly limits the use of foreign components in exported products, this would severely affect Vietnam’s exports, which heavily rely on Chinese components.
The report also does not account for the US tariff exemption on consumer electronic products, which make up about 28% of Vietnam’s total exports to the US. However, Schellekens believes that even if the US maintains the tariff exemption, Vietnam’s exports to the US could still drop by US$18 billion.
Among Southeast Asian countries, Cambodia faces the largest potential decrease in exports to the US, at 23.9%. However, Cambodia’s total exports to the US last year were only US$12.6 billion, so its overall impact is smaller than Vietnam’s.
Other countries in the region also face varying degrees of impact, with Thailand’s exports to the US expected to fall by 12.7%, Malaysia by 10.4%, and Indonesia by 6.4%. Singapore is less affected, with a drop of 3.8%, mainly because its trade with the US is focused on the service industry or involves high-tech product transshipment for which tariffs have not yet been clearly defined.
The United Nations Development Programme (UNDP) released its first trade volume estimate since the tariffs took effect on September 18. The report shows that, as tariffs drive up prices, total Southeast Asian exports to the US may decrease by 9.7%.
Among them, Vietnam’s potential decline is as high as 19.2%, about twice the Southeast Asian average. According to US trade data, Vietnam was the world's sixth largest exporter to the US last year, with a total export value of US$136.5 billion.
Philip Schellekens, chief economist for UNDP Asia-Pacific, told Reuters that in the worst-case scenario, where tariffs push up US inflation, a 20% US tariff on Vietnamese goods could gradually reduce Vietnam’s exports to the US by more than US$25 billion, accounting for about one-fifth of the annual total. In the Asia-Pacific region, in terms of export value, Vietnam’s impact is second only to China.
Vietnam is the world's second-largest exporter of footwear. According to Vietnam Customs data, since the tariffs took effect on August 7, Vietnam's exports to the US in August have dropped by 2% compared to July, with footwear exports falling by 5.5%.
UNDP predicts that the decline in exports to the US may shrink Vietnam’s domestic GDP by about 5%. The World Bank has already lowered its economic growth forecast for Vietnam this year.
This report has not yet included the potential impact of the 40% US tariff on goods transshipped through Vietnam. If the US strictly limits the use of foreign components in exported products, this would severely affect Vietnam’s exports, which heavily rely on Chinese components.
The report also does not account for the US tariff exemption on consumer electronic products, which make up about 28% of Vietnam’s total exports to the US. However, Schellekens believes that even if the US maintains the tariff exemption, Vietnam’s exports to the US could still drop by US$18 billion.
Among Southeast Asian countries, Cambodia faces the largest potential decrease in exports to the US, at 23.9%. However, Cambodia’s total exports to the US last year were only US$12.6 billion, so its overall impact is smaller than Vietnam’s.
Other countries in the region also face varying degrees of impact, with Thailand’s exports to the US expected to fall by 12.7%, Malaysia by 10.4%, and Indonesia by 6.4%. Singapore is less affected, with a drop of 3.8%, mainly because its trade with the US is focused on the service industry or involves high-tech product transshipment for which tariffs have not yet been clearly defined.