Nguyen Huu Phuc was “very upset” when Donald Trump pulled the US out of the Trans-Pacific Partnership trade agreement in 2017. But two years later Mr Phuc, who runs Como, a small textile marketing company in Ho Chi Minh City, is in a buoyant mood.
His group’s garment-making division plans to double its staff to more than 1,000 by the end of this year because of surging demand for its shirts, trousers, sleepwear and other products.
He says he has Mr Trump to thank for it — the US-China trade war is benefiting Vietnam more than any other country in Asia as more manufacturers, buyers and investors shift their supply chains away from China.
“The trade war between Donald Trump and Xi Jinping’s two countries can make things better for Vietnam — and not only Vietnam but Taiwan, Korea, Myanmar, Laos, Cambodia and Bangladesh, who are also good at textiles,” Mr Phuc said. “That is why we are investing a lot.”
US imports from Vietnam surged by nearly 40 per cent in the first four months of this year compared to the same period last year, according to a Financial Times analysis of data from the United States International Trade Commission. This was the largest rise among the 40 biggest importers to the US.
Over the same period, US imports from China fell by 13 per cent, the second-largest contraction since 2009.
The shift is lifting sales at Vietnamese manufacturers and suppliers not only in textiles, but a range of other sectors ranging from seafood to semiconductors; sectors in which the US has levied tariffs on their Chinese counterparts have made the biggest gains.
In the first four months of this year, US imports of mobile phones from Vietnam more than doubled year-on-year, while imports from China contracted by 27 per cent, according to data from the USITC. Over the same period, US computer imports from Vietnam rose by 79 per cent, against a 13 per cent drop in Chinese imports.
“Nowadays I see a lot of buyers from China and from the rest of the world looking for alternative sources from Vietnam and other countries like Cambodia,” said Vu Ngoc Khiem, country manager in Vietnam for Global Sources, a company that aims to link up global suppliers to buyers.
US and European retailers stepping up their buying in Vietnam include Home Depot, Target, Zara and OBI, Mr Khiem said, and the range of products they are buying include bags, apparel, footwear, steel and aluminium.
For Vietnamese companies such as Minh Phu Seafood, Vietnam’s largest shrimp producer, the “trade war between China and the US will create many chances for us to expand our business,” said Le Van Quang, its founder and chief executive.
While the company’s Chinese competitors used to import raw product from Vietnam and India to process it locally and export it to the US, they have stopped doing so since the Trump tariffs eroded their margins, he said. US imports of fish from Vietnam rose by more than 40 per cent in the first four months of this year, according to USITC data, while imports from China fell.
Vietnam is benefiting in particular because it sells many of the products hit by the tariffs.
“Vietnam is an outlier, and the reason for that is that it happens to sell a lot of the same goods that would be subject to tariffs in China,” said Yasuyuki Sawada, chief economist at the Asian Development Bank.
The ADB has estimated that Vietnam stands to gain up to a cumulative 2 per cent of GDP over three years if the US-China trade dispute escalates further.
The trade war has accelerated a longstanding trend in which some companies — Chinese, US and others — set up factories in Vietnam to escape rising wages, labour shortages and tighter environmental regulations elsewhere. Foreign direct investment in Vietnam reached a record $18bn last year, up nearly 20 percentage points to 58 per cent of GDP — topping most other south-east Asian countries.
“More overseas customers are searching for Vietnam — the demand is better,” said Quach Kien Lan, director of Greenyarn, a Vietnamese fabric producer that is experiencing rising orders because of the increase in US textile tariffs on China.
However, Vietnamese manufacturers and policymakers do not see the trade war as an unalloyed win.
Hanoi is already in Mr Trump’s crosshairs as its trade surplus rises; it was up 43 per cent in the first four months of this year, behind only China, Mexico, Japan and Germany. Last month, Vietnam only narrowly avoided being labelled a currency manipulator by the US Treasury.
Meanwhile, some exporters have sought to capitalise on Vietnam’s status as a relative safe haven by relabelling Chinese goods as “Made in Vietnam” — a practice Vietnam’s customs department vowed earlier this month to crack down on.
Balancing relations with the two great powers is a preoccupation for Vietnamese manufacturers, who are worried about the unpredictability of the trade war — and of Mr Trump.
Greenyarn’s Quach Kien Lan said that the shift could be “more of a challenge than [a] good” because businesses such as his own are investing in factories or stocks without knowing how — or whether — the dispute will be resolved.
“The trade war between China and America might be over at the end of this year, or it could continue,” he said. “And when it ends what will happen? Vietnam and the US have no trade agreement. What will happen to Vietnam then?
“We are kind of afraid of this trade war. How long will it last?”