By Thu Ngân

Việt Nam is strategically focusing on expanding traditional export markets while diversifying into new ones to navigate the growing volatility in world trade.

In recent weeks phrases like "trade tension" and "trade volatility" have dominated both international and domestic media following the announcement by the US Government of new tariffs on various imported products, notably on products such as steel and aluminium.

Trade experts in Việt Nam and elsewhere have made several prognostications and outlined scenarios for future global trade dynamics post the imposition of new tariffs by the US President Donald Trump administration. 

The World Economic Forum on its website said: “The proposed tariffs, which target major US trading partners, could upend traditional trading relations, creating significant uncertainty in the global economy.”

Fitch admitted that US trade policy represented a clear and significant risk to its macro-economic forecasts for the affected countries, and warned higher tariffs would weigh on global growth, as noted in its 2025 Global Sovereigns Outlook.

Vietnamese experts fear potential worldwide trade volatility could disrupt supply chains and reduce global production and consumption, thereby impacting the country's export potential and economic growth momentum. 

As a highly open economy deeply integrated into global supply chains, Việt Nam is likely to be affected by this trade volatility to some extent.

However, as reiterated by a spokesperson for the Ministry of Foreign Affairs, the Government is closely monitoring international developments so that it can take suitable measures to mitigate their economic impacts while fostering the healthy development of trade.

A proactive approach and careful preparation for sustainable export growth are therefore urgent, especially when the Government is making all efforts to reach the goals of topping 8 per cent growth this year and achieving double-digit growth in the coming years.

 

At a Government meeting on February 5, Prime Minister Phạm Minh Chính noted complex changes of the global political and economic environment, as well as major trading partners like the US and China may directly impact Việt Nam’s exports and business operations.

He exhorted cabinet members to anticipate and analyse emerging issues such as the possibility of a global trade war, which could disrupt supply chains and shrink Việt Nam’s export markets. 

Ministries and local authorities have been tasked with proposing solutions and responsive strategies to help Việt Nam overcome these challenges with an eye on seizing growth opportunities.

The Ministry of Industry and Trade (MoIT), as one of the key drivers of national growth, has developed various scenarios to sustain and enhance exports. 

One of the main strategies being employed is to continue capitalising on existing markets and maximising the benefits of current free trade agreements alongside exploring new ones.

This approach enables businesses to diversify their customer bases, product lines, and supply chains to bolster export increase.

New and traditional 

As Việt Nam strives to reduce the impacts caused by global trade challenges, the proactive pursuit of new markets, particularly niche ones, while maintaining strong relationships in traditional markets, remains essential. 

In line with this, the Government underscores the criticality of exploring markets in halal food countries, the Middle East, Africa, and South America. 

In response to the guidance from the MoIT, Việt Nam trade offices abroad have launched numerous programmes to expand markets even further.

 

Việt Nam's trade office in South Africa, its biggest trade partner in Africa, said it regularly took part in online meetings with domestic companies to update information as well as give them advice to explore and expand markets.

They also proactively engaged with chambers of commerce and business communities in South Africa to introduce high-quality export products from Việt Nam.

It provided information to wholesale and retail systems and supermarket chains in South Africa interested in Vietnamese products.

Dr Đinh Thế Hiển, an economist, also highlighted India and South America as lucrative markets with ample opportunities for Vietnamese enterprises due to their large population bases and consumer-friendly environment.

"While expanding into new and niche markets is crucial," Hiển said, "concentrating on traditional markets is equally imperative for sustained growth."

He said consistency in nurturing relationships with key trade partners such as China, the United States, and the EU was paramount for Việt Nam.

China continued to remain its top trade partner, recording substantial growth in trade volumes, with the US ranking second and the EU market also showing promising growth prospects.

"These are the three biggest markets, and Việt Nam holds many advantages in exporting to them," Hiển said. 

“Successfully capturing these three markets in the new context will help Việt Nam effectively navigate trade volatility.”

He said the positive signals in the geopolitical situation suggested that the Russia-Ukraine war could end.

Exports to the EU and US had been significantly impacted by the war over the past three years, but there might be a recovery this year once the conflict comes to an end, he added.

The potential of traditional markets is clearly shown through figures. China remained the largest trade partner, with bilateral trade being worth US$204.9 billion last year, a 19.2 per cent increase from 2023, with Việt Nam’s exports reaching $60.6 billion. 

The US was second at $134.6 billion, a 21.5 per cent increase, with Việt Nam’s exports reaching $119.6 billion. 

Trade with the EU was worth an estimated $68.8 billion, with exports estimated at $52.1 billion.

So, successfully leveraging the key markets while exploring new and niche ones would enable Việt Nam to effectively control trade volatility and uncertainties.

FTAs – an escape route

Free trade agreements constitute an escape route to increase trade by the targeted 12 per cent in 2025 amidst the prevailing global volatility. 

Under normal circumstances the tariff rates set by FTAs offer significant advantages for member nations, and in times of trade volatility they can become a decisive factor influencing export orders, presenting a crucial advantage.

FTAs also facilitate trade by reducing non-tariff barriers and simplifying international transactions.

 

HSBC said: “FTAs are an important source of opportunity for companies that rely on cross-border partnerships… FTAs grease the wheels of commerce by simplifying processes and reducing frictions in international transactions – such as tariffs and even more punitive non-tariff barriers to trade.”

Talking about the benefits of a large-sized FTA, the CPTPP,  David Johnstone, head of free trade agreement utilisation, UK Government, said: “CPTPP is a fantastic trade bloc, representing 15 per cent of global GDP. Therefore, I anticipate increased trade activities among the economies involved in the short, medium and long terms as well...”

The benefits derived from participation in FTAs are undeniable for Việt Nam, with the country signing a total of 17 FTAs by October 2024 and actively negotiating two more, the Việt Nam – EFTA FTA (including Norway, Switzerland, Iceland, and Liechtenstein), and the ASEAN - Canada FTA (ACaFTA).

These agreements have played a pivotal role in boosting trade and elevating Việt Nam's international status as a key partner in the global trade network.

With a broad network of over 60 FTA partners spanning various continents and accounting for almost 90 per cent of global GDP, Việt Nam has emerged as a crucial link in connecting nations worldwide.

A report from the MoIT in mid-2024 said FTA partners accounted for 65 per cent of the country’s total exports.

In 2024 trade rose to a record US$800 billion, with exports topping $400 billion. Việt Nam posted a trade surplus – of nearly $25 billion -- for a ninth consecutive year.

The figure will surely increase after the Việt Nam – EFTA FTA and ACaFTA are signed.

For the Việt Nam - EFTA FTA members have completed 16 rounds of negotiations and held numerous online meetings, discussing trade facilitation, competition, trade and sustainable development, trade remedies, and final provisions.

Fish and crustaceans, pharmaceutical products and electrical machinery were the main exports from EFTA to Việt Nam, while electrical machinery, footwear and woven apparel and clothing accessories were the primary imports from Việt Nam.

In another development, the 11th round of the ASEAN-Canada Free Trade Agreement negotiations was organised in Bangkok from January 15 to 17. 

The talks focused on advancing discussions across various sectors, with the two sides aiming to reach a significant conclusion by the end of 2025.

MoIT has kept supporting businesses and industry associations in leveraging their competitive advantages, utilising the benefits of 17 free trade agreements and nearly dozens of bilateral cooperation mechanisms to effectively explore key markets, traditional markets, develop small and niche markets, and tap into emerging potential markets.

Amidst the ongoing challenges, the Government and businesses are seeking opportunities for growth with all-encompassing efforts and proactive measures.

As the country continues to pursue growth, it remains poised to seize emerging opportunities while overcoming trade hurdles effectively.

In danger lies opportunities. VNS