Tariff freeze gives businesses breathing room to adjust

April 11, 2025 | 15:22

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US President Donald Trump announced a 90-day suspension of retaliatory tariffs on April 10, for 75 key trade partners, including Vietnam. Vietnamese businesses are being urged to treat as an opportunity for strategic recalibration amid growing global uncertainties.

Temporary Tariff Suspension: A Golden Window for Strategic Business Adjustment

Ngo Sy Hoai, vice chairman and general secretary of the Association of Vietnam Timber and Forest Products (right), discussing the tariffs. Photo: Chi Cuong

Speaking on a talk show hosted by VIR to discuss the tariffs on that same day, Ngo Sy Hoai, vice chairman and general secretary of the Association of Vietnam Timber and Forest Products, spoke about how the timber industry is navigating this particularly volatile period.

The US initiated a national security investigation into imported sawn timber on March 1, raising concerns of potential tariffs of up to 25 per cent on wood materials and products from Vietnam, with, the looming threat of retaliatory tariffs ready to induce more market stress.

"We’ve already developed scenarios assuming President Trump might pause investigations for negotiation purposes," said Hoai.

Vietnam is currently the world’s leading supplier of wooden furniture to the US, with export turnover of about $9 billion, with Vietnamese timber products accounting for 38–40 per cent of US imports in this segment.

From a legal advisory perspective, Truong Huu Ngu, managing partner of Vilasia, observed that while businesses are worried, they are also actively seeking ways to adapt. "Every challenge presents an opportunity. We’re witnessing a turning point for Vietnam’s economy to diversify markets, reduce dependencies, and enhance internal resilience," said Ngu.

Ngu described the 90-day delay as more than just a calm before the storm, "This could well be a golden period for Vietnamese enterprises to realign and prepare," he said.

Hoai stressed that the real challenge lies ahead. Any agreed tariff compromise between Vietnam and the US may still impose considerable pressure on timber exporters. “Export segments like wood chips, pellets, and timber products already operate on very slim margins. Even a modest tariff increase could significantly strain Vietnamese businesses,” he explained.

Meanwhile, US retailers such as Walmart, Target, and Amazon are unlikely to absorb cost hikes caused by new tariffs. If product prices rise, these distributors may scale back or suspend orders, waiting on negotiation outcomes.

Amid global economic uncertainty, businesses must prioritise risk mitigation–and for Ngu, that starts with contracts. He recommends that exporters scrutinize existing agreements for clauses covering force majeure or price renegotiation in the face of market disruption. Likewise, suppliers should review input contracts to ensure flexible responses to changing conditions.

Equally important is compliance. "Now more than ever, businesses must ensure robust documentation to verify the origin and legality of goods, as protection against retaliatory duties," said Ngu.

Looking ahead, Hoai urged the timber sector to shift focus from volume-driven to value-driven growth. "It’s like climbing a mountain–you sometimes need to pause, or even step back, to chart a sustainable path forward. This is the moment for Vietnam to rethink its growth model," he said.

"We must invest in technology, digital transformation, and product design that reflects Vietnam’s cultural identity. Building our own brands is the only way to escape the limitations of outsourcing."

While the US remains a crucial market, Hoai went on to speak of the significant opportunities in Japan, South Korea, China, and the Middle East. "Vietnamese exporters have yet to fully tap these markets. Japanese and Korean consumers value natural wooden furniture and interior spaces. Local firms need to understand these demands and seek expert advice on market-specific products," he said.

"We need to dig deeper, create more value, and invest in our own materials and branding. That’s how Vietnamese companies can compete in a volatile world," added Ngu.

Ngu also encouraged businesses to take fuller advantage of free trade agreements (FTAs) such as the EVFTA with the EU and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership with Japan, Australia, and Canada. These FTAs favour high-quality products that meet safety and traceability standards–especially in textiles, certified timber, processed foods, and supporting industries.

Beyond traditional markets, emerging economies like India, Israel, and the UAE offer new FTA-based avenues, requiring Vietnamese firms to identify niche opportunities and adopt appropriate strategies.

To future-proof operations, Ngu urged companies to build contractual risk defences, explore financial tools like trade credit insurance and FX hedging, and seek policy and financial support from the government and banks. He cautioned against hasty cost-cutting, especially through mass layoffs, advocating instead for legally sound and humane restructuring approaches.

Ultimately, he concluded, firms with both domestic sales and export footprints are proving more resilient. "The lesson of not putting all one's eggs in a single basket remains as relevant as ever," said Ngu.

Hanker Liang, head of Administration and Human Resources Rocom Electric Vietnam A 46 per cent tariff in the next three months will affect our production costs and sales volume in the US market, as our products are 100 per cent exported to the US. I am not sure if the upcoming 46 per cent tariff will decrease or undergo any other changes in the near future. This will affect our information on additional investments and concerns about future market uncertainty. There is currently no such adjustment plan, it depends on the changes in the market. To avoid potential sales weakness in the US market, we will constantly monitor inventory and prevent the generation of large quantities of inventory. The outlook on the Vietnamese government's ability to negotiate a revision of this policy with the Trump administration will depend on the foreign policy and stance of the Vietnamese government. Externally, we certainly hope that the tariff rate of the US can be improved. Internally, we hope that the Vietnamese government can provide some policies or measures that are helpful to enterprises. Peng Wei, director Pei Ming Vietnam Electronics Technology Our company's exports to the US market will struggle with a lot of challenges, I’m afraid that there will be immediate order cancellations because US buyers cannot absorb 46 per cent cost hikes. In long-term risk, our clients will take into consideration production shifts to Africa/India. Regarding my supply chain, my clients are Ericsson, Nokia’s 5G equipment, antennas, and network infrastructure in the US. An upcoming 46 per cent tariff would make their products much more expensive for American telecom operators (AT&T, Verizon, T-Mobile). This could lead to reduced demand or delayed 5G deployments in the US. My company is considering adjustments to export markets, including a potential shift focus to markets other than the US. It takes time, but we are trying to figure it out. Additionally, specific measures have been implemented to mitigate the potential risks associated with this new tariff policy, like diversifying our supply chain to reduce dependency on tariff-affected regions, engaging with trade associations to advocate for exemptions or favourable terms, and pre-negotiating to refix the price regarding upcoming terms when the tariff officially applies. Moreover, I expect trade associations to support businesses in expanding into new markets outside the US while also gathering feedback and proposals to assist Vietnamese government in the negotiation process. Aluwihare Niranjan Merril, managing director R-pac Vietnam R-pac Vietnam, as part of the r-pac Group with headquarters in the US, is likely to be significantly impacted by the 46 per cent reciprocal tariff. Given our close ties to the US market, we anticipate that this tariff will affect a large portion of our exports, especially in the printing and packaging sector, where cost competitiveness is crucial. This tariff creates challenges in maintaining our market share in the US market, which is a significant part of our revenue stream. The 46 per cent tariff is significantly increasing our production costs, particularly for raw materials and logistics, which directly impacts our competitiveness in the market. We expect it will affect over 75 per cent of our customers, leading to a gradual shift of orders to alternative markets. In the short term, we anticipate a decrease in order volumes as customers look to mitigate the impact of higher costs. As a result, we will be forced to reassess our cost structure and may need to delay any planned expansions. Should businesses move to other countries, we will shift production capacity from Vietnam to other regions to align with market demands and maintain operational efficiency. Given these challenges, we aim to present a clear picture of the potential impact on negotiating better terms and minimising costs. This proactive approach will help us navigate the immediate consequences and adjust to the evolving market conditions. We expect the Vietnamese government and industry associations to provide immediate support, such as trade incentives, tax reductions, or adjustments to export procedures, to help mitigate these challenges. Regarding the government's ability to negotiate with the Trump administration, we are cautiously hopeful. While the geopolitical landscape may make this a difficult and lengthy process, we believe that active negotiations could lead to some revisions in the tariff policy, which would help alleviate the pressure on businesses like ours. In the absence of such support, we may be forced to delay expansion plans or restructure our production processes, which could incur additional costs. Reducing overall expenses is crucial to remain competitive, particularly in the US market, where the tariff is having the most significant impact.

Hanker Liang, head of Administration and Human Resources Rocom Electric Vietnam

A 46 per cent tariff in the next three months will affect our production costs and sales volume in the US market, as our products are 100 per cent exported to the US. I am not sure if the upcoming 46 per cent tariff will decrease or undergo any other changes in the near future. This will affect our information on additional investments and concerns about future market uncertainty.

There is currently no such adjustment plan, it depends on the changes in the market. To avoid potential sales weakness in the US market, we will constantly monitor inventory and prevent the generation of large quantities of inventory. The outlook on the Vietnamese government's ability to negotiate a revision of this policy with the Trump administration will depend on the foreign policy and stance of the Vietnamese government.

Externally, we certainly hope that the tariff rate of the US can be improved. Internally, we hope that the Vietnamese government can provide some policies or measures that are helpful to enterprises.

Peng Wei, director Pei Ming Vietnam Electronics Technology

Our company's exports to the US market will struggle with a lot of challenges, I’m afraid that there will be immediate order cancellations because US buyers cannot absorb 46 per cent cost hikes. In long-term risk, our clients will take into consideration production shifts to Africa/India.

Regarding my supply chain, my clients are Ericsson, Nokia’s 5G equipment, antennas, and network infrastructure in the US. An upcoming 46 per cent tariff would make their products much more expensive for American telecom operators (AT&T, Verizon, T-Mobile). This could lead to reduced demand or delayed 5G deployments in the US.

My company is considering adjustments to export markets, including a potential shift focus to markets other than the US. It takes time, but we are trying to figure it out. Additionally, specific measures have been implemented to mitigate the potential risks associated with this new tariff policy, like diversifying our supply chain to reduce dependency on tariff-affected regions, engaging with trade associations to advocate for exemptions or favourable terms, and pre-negotiating to refix the price regarding upcoming terms when the tariff officially applies.

Moreover, I expect trade associations to support businesses in expanding into new markets outside the US while also gathering feedback and proposals to assist Vietnamese government in the negotiation process.

Aluwihare Niranjan Merril, managing director R-pac Vietnam

R-pac Vietnam, as part of the r-pac Group with headquarters in the US, is likely to be significantly impacted by the 46 per cent reciprocal tariff. Given our close ties to the US market, we anticipate that this tariff will affect a large portion of our exports, especially in the printing and packaging sector, where cost competitiveness is crucial. This tariff creates challenges in maintaining our market share in the US market, which is a significant part of our revenue stream.

The 46 per cent tariff is significantly increasing our production costs, particularly for raw materials and logistics, which directly impacts our competitiveness in the market. We expect it will affect over 75 per cent of our customers, leading to a gradual shift of orders to alternative markets.

In the short term, we anticipate a decrease in order volumes as customers look to mitigate the impact of higher costs. As a result, we will be forced to reassess our cost structure and may need to delay any planned expansions. Should businesses move to other countries, we will shift production capacity from Vietnam to other regions to align with market demands and maintain operational efficiency.

Given these challenges, we aim to present a clear picture of the potential impact on negotiating better terms and minimising costs. This proactive approach will help us navigate the immediate consequences and adjust to the evolving market conditions.

We expect the Vietnamese government and industry associations to provide immediate support, such as trade incentives, tax reductions, or adjustments to export procedures, to help mitigate these challenges. Regarding the government's ability to negotiate with the Trump administration, we are cautiously hopeful. While the geopolitical landscape may make this a difficult and lengthy process, we believe that active negotiations could lead to some revisions in the tariff policy, which would help alleviate the pressure on businesses like ours.

In the absence of such support, we may be forced to delay expansion plans or restructure our production processes, which could incur additional costs. Reducing overall expenses is crucial to remain competitive, particularly in the US market, where the tariff is having the most significant impact.

By Nguyen Thu

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