2025 is set to be a year of surmounting obstacles, with global uncertainties, policy shifts, and economic challenges shaping the future, according HSBC Vietnam.
The global economy has grappled with profound challenges in recent years, including the Covid-19 pandemic, geopolitical tensions in Eastern Europe and the Middle East, the collapse of China’s housing market, and surging inflation and interest rates. As a consequence, hopes for stability in 2025 may prove elusive. Geopolitical conflicts persist, China’s economic struggles continue, and the normalization of post-pandemic interest rates has been slower than anticipated. Adding further uncertainty, Donald Trump’s re-election as US president has reignited focus on tariffs, with trade tensions poised to escalate.
US trade policy poses significant risks to global economies. In early February, President Trump announced 25 per cent tariffs on imports from Canada and Mexico, with a 10 per cent tariff on Canadian energy, and an additional 10 per cent duty on Chinese products. While the measures on Mexico and Canada have been paused for a 30-day period, China announced its plan to retaliate with tariffs on $14 billion worth of imports from the US, effective from February 10. There is still a great deal of uncertainty about how the situation will unfold. But, in principle, these measures, if and when implemented in full, could have sweeping economic consequences, affecting more than 40 per cent of American imports. They are also expected to impact US profits, inflation, and trading partners, especially if retaliation occurs, further straining global trade flows and sentiment.
At the same time, tariffs threaten both global trade and broader growth. The increased level of uncertainty in the global trading system is likely to weigh on investment plans, while supply chains are ripe for rejigging around any potential tariff targets.
Asian outlook
A sharp rise in US import tariffs could disrupt the global economy, impacting not only inflation and growth prospects in the US but also trade and investment patterns across Asia and beyond. However, the specifics of this policy remain unclear, making it difficult to predict its effects on individual economies and sectors.
During Donald Trump’s first term as US president, heightened trade tensions with China diverted trade and investment into other markets, with ASEAN experiencing faster growth, while Chinese exports continued to soar by capturing market share from developed economies. This time, tariffs on China have been higher and broader, potentially extending to other economies. Products with Chinese components or re-exports from other markets might also face scrutiny.
Despite the significant rise in tariffs, the US’s largest bilateral trade deficit is still with Mainland China, followed by ASEAN, Mexico, and Germany. Deficits with Japan and Taiwan are also sizeable, on par with India and South Korea, and well ahead of Canada (if services are included). China retains significant market share in US imports of tariffed goods, such as lithium-ion batteries and plastic items, suggesting that higher tariffs on imports could lead to further shifts towards other economies. So far, US tariffs on China have been imposed mainly on product components rather than final household items, to limit the “sticker shock” for consumers. Notwithstanding the risk of higher goods inflation in the US, there is stillroom to expand the number of tariffed items, in turn offering opportunities for others to capture China’s market share.
In 2025, a key question will be whether US trade policy focuses solely on imports directly from China or extends to economies using Chinese components or with significant trade deficits with the US.
Looking on the bright side, the US trade strategy provides a good opportunity for Asia to rethink its growth engines. First, the region should unleash its domestic consumption power to become less reliant on demand from other markets, gaining more balance between its savings and investments. Second, Asia can expand markets within itself rather than relying on Western countries. It could improve regional integration and resilience through intra-regional agreements such as the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Beyond trade
Policy uncertainty also weighs on businesses, delaying cross-border investment. For Southeast Asia, this could dampen FDI in the short term, particularly in Vietnam and Malaysia, where it accounts for a substantial portion of overall investment. Moreover, a growing share of FDI from China adds another layer of uncertainty, as such factories often rely heavily on Chinese-produced components for export processing, potentially falling under closer US scrutiny.
On the brighter side, manufacturing investment across Asia could rebound strongly if US trade restrictions remain focused on China or prove less restrictive than anticipated. However, a broader, more restrictive US policy could lead to lasting impacts on investment.
Exchange rate volatility presents another challenge. As history shows, FX moves can be considerable in response to the introduction of tariffs, with the potential of partly, or even fully, offsetting the import price distortions that duties entail. For example, since mid-2021, the US dollar is up around 20 per cent against major currencies and has risen well over 30 per cent over the decades, creating a potential “buffer” against tariff effects through currency realignment.
Across Asia, a slowdown in consumer spending, though uneven, is partly due to the lingering effect of the earlier inflation shock. As price pressures normalize, consumption growth should stabilize, even if with a delay. However, a rise in global food prices poses a risk to Asian inflation, particularly in emerging economies, though the correlation between global and local food prices is generally weaker than that of crude oil and domestic energy costs.
Apart from Japan, the overall direction of monetary policy in Asia is still moving towards easing. Yet, heightened exchange rate volatility remains a concern. For example, since the Fed delivered its first interest rate cut of the cycle, a chunky 50 basis points in mid-September, almost all Asian currencies have seen sizable depreciation against the US dollar. While this cycle could have provided an opportunity for swift rate cuts, many Asian central banks have been forced to adopt a more “defensive” stance, keeping a wary eye on volatile FX markets.
In 2025, ongoing caution is warranted. The spread between local policy rates and the Fed funds rate is much lower compared to the pre-pandemic period, and in many cases even negative, leaving little “buffer” to anchor exchange rates against swings in Fed policy rate expectations. If monetary policy remains constrained by lingering price pressures and exchange rate volatility, governments may turn to fiscal measures instead.
What’s next for Vietnam?
While the world waits for US policies to unfold, Vietnam’s markets are likely to feel their effects, though the nation’s resilience offers hope. With a proven ability to overcome challenges, Vietnam is well-positioned to navigate these uncertainties, driven by its ambitious goals and remarkable progress.
In 2024, Vietnam’s GDP expanded by 7.09 per cent, reclaiming its position as ASEAN’s fastest-growing economy. This growth was supported by strong trade performance, particularly in consumer electronics, textiles, footwear, machinery, and agriculture, despite the setbacks from Typhoon Yagi, the strongest storm in 70 years. Given this broad-based recovery, Vietnam’s export momentum is expected to continue, even amid global uncertainties.
Vietnam has consistently attracted high levels of FDI, with inflows exceeding 4 per cent of GDP; among the highest in ASEAN. In 2024, it secured nearly $38.23 billion in FDI, with $25.35 billion disbursed by early January, ranking it 18th among the emerging markets that are most appealing to investors. In the past 20 years, Vietnam has become a major manufacturing base, deeply integrated into global supply chains. Its global value chain (GVC) participation rate has sharply risen over the years, and is now comparable to Singapore’s.
Vietnam’s exports have grown over 13 per cent annually on average since 2007, dominated by foreign-invested enterprises. From being a minor exporter before 2013, Vietnam recorded one of the fastest average annual export growth rates globally in the 2019-2023 period. It has therefore advanced significantly in import-export rankings, now standing second in ASEAN, trailing only Singapore. It is the world’s 23rd-largest exporter and 22nd-largest importer, with goods present in over 230 countries and territories. Vietnam ranked first globally in both the production and export of coffee and pepper in 2024, while maintaining its position as the third-largest rice exporter in 2023-2024. It also surpassed South Korea to become the world’s second-largest smartphone exporter.
Among ASEAN peers, Vietnam has gained the highest increase in global market share of exports since 2016, centering around consumer electronics such as smartphones, as well as textiles and footwear. Vietnam also has the highest export exposure to the US, comprising almost 30 per cent of shipments. Given its sizeable trade surplus and high export exposure to the US, Vietnam’s exports are vulnerable to tariff risks, and any escalation could pose challenges. Hence, it is essential for Vietnam to diversify its export range, particularly in high-value products like fruit and semiconductors, while keeping a close eye on US trade policy.
Despite Vietnam’s strong fundamentals, such as competitive labor costs and a favorable FDI environment, uncertainties around US trade policy could disrupt global business investment decisions. Therefore, to mitigate these risks, Vietnam must expand its network of international trade agreements, enhance non-tax incentives, and prioritize higher-value manufacturing. Alongside these efforts, the government is investing in infrastructure, workforce reskilling, and an investment support fund to comply with the Global Minimum Tax (GMT), ensuring the country remains resilient in the face of global economic shifts.
Vietnam envisions a transformative future, aiming to achieve upper-middle-income status by 2030 and high-income nation status by 2045. By 2050, the country is committed to reaching net-zero emissions while positioning itself as a global leader in the semiconductor and electronics industries. Additionally, Vietnam aspires for its digital economy to contribute 30 per cent of GDP by 2030, driving sustainable growth and innovation.
2 New rules issued for export food certification
The dossier must also include a food safety test result sheet for a sample from the exported food product batch.
The Ministry of Health has issued a circular, establishing the required documents and procedures for issuing certificates for exported food products within its management scope.
Under Circular No. 08/2025/TT_BYT, dated March 7, 2025, exporting organizations and individuals must submit an application for certification using a form provided in the annex of the Circular. This document is mandatory and serves as the first step in the certification process.
The Circular specifies that the application dossier for a certificate, whether for a single exported shipment or a food production facility, must include a completed application form for the certificate and a valid certificate of food safety eligibility, or one of the following alternatives: Good Manufacturing Practices (GMP); Hazard Analysis and Critical Control Points (HACCP); ISO 22000 Food Safety Management System; International Food Standard (IFS); BRC Global Standards for Food Safety; Food Safety System Certification (FSSC 22000), or an equivalent certification (certified copy provided by the exporting organization or individual).
A crucial part of the application is the food safety testing report for a sample from the export batch. This report must be issued by a designated testing laboratory or a laboratory that meets ISO 17025 standards. The report verifies that the sample meets food safety requirements, technical specifications, national regulations or international standards.
The dossier must also includes a proof of payment for the assessment fee for issuing the certificate for exported food products.
3 FDI enterprises continue to be key growth driver of wood industry
They contributing 48.3% of Vietnam’s wood export value last year.
Foreign direct investment (FDI) enterprises continue to playing important role as one of key growth drivers of the wood industry of Vietnam, according to a report on FDI engagement in Vietnam’s wood industry in 2024 released recently by Forest Trends and the Vietnam Timber and Forest Products Association (VIFOREST).
Among over 4,200 businesses directly exporting wood and wood products, FDI enterprises accounted for 777 or 18.5 per cent of the total.
Vietnam earned $15.89 billion from exports of wood and wood products in 2024, up 20.1% year-on-year.
Of the figure, FDI enterprises contributed 48.3% or $7.67 billion.
Last year, the number of new FDI projects in the industry increased by 7% year-on-year, with registered investment capital surging more than 73% against 2023.
Out of 61 new projects invested in by 16 countries and territories, 25 were from China with registered investment capital of $185.3 million, accounting for 41% and 35.7% of the totals, respectively. These projects focused on wood processing, including products such as beds, cabinets, tables, chairs, and sofas.
4 EU not to impose tax and non-tax defensive measures against Vietnam
This results from Vietnam’s signing of the Multilateral Competent Authority Agreement (MCAA) on the exchange of country-by-country reports (CbCR).
The EU will not impose tax and non-tax defensive measures against Vietnam, since the country officially signed the Multilateral Competent Authority Agreement (MCAA) on the exchange of country-by-country reports (CbCR) in January this year, according to a report from the Government News.
As Vietnam has officially become the 107th signatory of the CbC MCAA, the EU acknowledges and highly appreciates the nation’s efforts in fulfilling its international commitments and has included Vietnam in Annex II of the EU’s list of non-cooperative jurisdictions for tax purposes.
The signing of the CbC MCAA in early 2025 is an appropriate step to ensure the implementation of the global minimum tax according to the planned roadmap. It also reaffirms Vietnam’s commitment to enhancing financial transparency and international economic integration.
The CbCR is a crucial tool that helps tax authorities assess transfer pricing risks and tax avoidance issues by providing detailed data on revenue, profits, income taxes paid, tangible assets, and business activities of multinational corporations in each country.
This report also helps identify enterprises subject to global minimum tax regulations, thereby supporting the implementation of the Qualified Domestic Minimum Top-up Tax (QDMTT) and the Income Inclusion Rule (IIR) in accordance with Resolution 07/2023/QH15 of the National Assembly.
With total two-way trade reaching nearly $68.4 billion in 2024, Vietnam recorded a trade surplus of $35 billion with the 27 EU member states – higher than the $28.7 billion recorded in 2023.
Vietnam’s exports to the EU made an impressive recovery in 2024, reaching nearly $51.7 billion, an increase of $8.08 billion compared to 2023.
5 Vietnam Trade balance amid rising global competition
With a trade volume nearing $800 billion, Vietnam ranks 23rd in terms of global exports and 22nd in imports, which represents an average annual growth rate of over 13 per cent since 2007.
Additionally, to achieve a GDP growth rate of 8 per cent or more in 2025, and lay the groundwork for double-digit expansion in the following years, the Government is focusing on revitalizing traditional growth drivers such as investment, exports and consumption while fostering new economic engines.
The Vietnamese Government has already issued multiple directives to increase imports from major markets, particularly the US, as part of efforts to promote harmonious and sustainable trade.
To move toward trade balance, Vietnam plans to purchase more US products, including aircraft, semiconductor chips and liquefied natural gas (LNG). Additionally, domestic enterprises are encouraged to adopt high-quality US goods and services.
In the energy sector, as Vietnam pushes for investment in renewable electricity, businesses are being urged to consider US technology for ongoing and future projects.
With a trade volume nearing $800 billion, Việt Nam ranks 23rd in global exports and 22nd in imports, maintaining an average annual growth rate of over 13 per cent since 2007.
Despite global challenges, Vietnam’s total export turnover in 2024 maintained positive growth, reaching US$405.53 billion, a 14.3 per cent increase from the previous year. Imports also rose 16.7 per cent year-on-year, totaling $380.76 billion.
6 Vietnam’s trade surplus hits $1.47 billion in first two months 2025
The country’s export earnings grew by 8.4 per cent, while its import turnover rose by 15.9 per cent, resulting in a trade surplus of US$1.47 billion.
Vietnam’s total import-export turnover reached US$127.07 billion in the first two months of 2025, marking a 12 per cent increase compared to the same period last year, the General Statistics Office (GSO) has reported.
During the two-month period, Vietnam’s export turnover reached $64.27 billion, an 8.4 per cent year-on-year rise, while its import turnover rose by 15.9 per cent, resulting in a trade surplus of $1.47 billion.
The domestic sector contributed $17.92 billion (up 12.8 per cent), accounting for 27.9 per cent of total exports, while the foreign-invested sector, including crude oil, accounted for $46.35 billion (up 6.7 per cent), making up 72.1 per cent of total exports.
During this period, 12 export items surpassed the $1 billion mark, making up 77.7 per cent of total export value. Four of these items exceeded $5 billion, accounting for 54.6 per cent.
By sector, processed industrial goods remained the dominant export category, generating $57.01 billion (88.7 per cent of the total). Agricultural and forestry products contributed $5.35 billion (8.3 per cent), seafood reached $1.43 billion (2.2 per cent), and fuel and mineral products totaled $0.48 billion (0.8 per cent).
In February alone, the export turnover stood at $31.11 billion, down 6.2 per cent from the previous month but up 25.7 per cent year-on-year. The domestic economic sector posted an impressive growth rate of 32.8 per cent, while the foreign-invested sector, including crude oil, increased by 23.2 per cent.
On the import side, Vietnam recorded $62.8 billion in total import value, an increase of 15.9 per cent year-on-year. The domestic sector accounted for $22.8 billion (up 18.7 per cent), while the foreign-invested sector imported $40 billion (up 14.4 per cent) worth of goods.
Sixteen imported items exceeded $1 billion in value, comprising 76.2 per cent of total imports, while two items surpassed the $5 billion mark, accounting for 44.5 per cent.
In terms of import structure, production materials dominated with $58.83 billion, accounting for 93.7 per cent of the total value. This included machinery, equipment, tools, and spare parts, which made up 50.8 per cent, while raw materials, fuel, and supplies accounted for 42.9 per cent. Consumer goods imports stood at $3.97 billion, representing 6.3 per cent.
The US remained Vietnam’s largest export market, with turnover reaching $19.6 billion. Meanwhile, China continued to be the country’s biggest import source, with imports valued at $23.3 billion.
Vietnam achieved a trade surplus of $17 billion with the US, a 16.3 per cent increase from the previous year, while its surplus with the EU expanded by 19.2 per cent to $6.4 billion. Notably, the country’s trade surplus with Japan surged to $0.5 billion, nearly 10 times the figure of the same period in 2024.
However, Vietnam continued to run trade deficits with several major partners, including China ($15.4 billion, up 36.9 per cent), the Republic of Korea ($4.6 billion, up 20.6 per cent), and ASEAN ($2.1 billion, up 116.8 per cent).