The Ascension to Power

As Trump is re-elected, new reforms and policies are taking shape. Among them is his threat to impose a 25% tariff on Mexico and Canada, alongside a 10% tariff on China—claiming these countries allegedly failed to address illegal immigration and co-conspirators for illegal fentanyl distribution in the United States (US). 

Yet the article is not to stir political debate but to explore the ramifications of these tariffs on consumers and Asian countries. While many news outlets have focused on the potential setbacks in the affected countries, few have explored how others might either suffer or benefit from the situation. Hence, this piece shall highlight how Trump’s ascension to power might become the best opportunity for some Asian economies.

The Price of Tariffs

The Guardian defines a tariff as a tax imposed on foreign goods entering a country. As the world’s largest importer, the US brought in $3.2 trillion worth of goods in 2022, with imports from Canada, Mexico, and China totaling $1.2 trillion in 2023. Trump takes pride in this idea, believing the US government would receive more revenue through these tariffs, coining tariffs as the “most beautiful word in the dictionary” in an interview with Bloomberg. 

Brown University Professor of Economics Şebnem Kalemli-Özcan disagrees by arguing, “For many economists, tariff is actually the worst word in the dictionary.” She explains that ultimately American consumers and businesses will pay the price. As a trade-deficit nation, the US imports more than its exports. According to the Tax Policy Center, a 60% levy on Chinese goods accompanied by a 20% worldwide tariff could raise the costs for the average US household to up to $3,000 in 2025.

As companies face higher costs for goods, they often transfer those expenses to consumers through price increases. This can reduce consumer spending, which in turn lowers business investment and may lead to job losses.

Jason Miller, a professor of supply chain management at Michigan State University reaffirms such claims stating, “Because of the combination of these three countries, it’s going to be difficult to go down an aisle of a grocery store and not see some sort of inflationary effect.” Capital Economics projected that the newly announced tariffs could drive annual inflation up from 2.9% to as much as 4%.

Products affected by Trump’s Tariffs (Image source: BBC)

Nevertheless, Trump’s tariff threats carry weight, as they could impose significant economic pressure on targeted countries, prompting businesses to relocate. According to the BBC, Chinese factories with 500 workers have shrunk to just 200 employees, while American buyers are already exploring alternative manufacturing hubs in neighboring regions outside of China.

Business owner Huang Zhaodong, who recently relocated his factory, told the BBC that customers had pressured him to move production overseas. He agrees with their concerns, estimating that a 10% tariff increase could cost him an additional $800,000 in earnings. “Manufacturing clothes in China under these tariff conditions is simply unsustainable,” he said.

A Victor Emerges

Cases like Mr. Huang’s have proved the challenges that Trump’s tariff has imposed on countries like China. The beginning of the Trump trade war has led businesses to flee to Southeast Asian nations, most notably Vietnam. 

While other Southeast Asian nations also benefit from shifting supply chains, Vietnam has emerged as a top destination due to its growing industrial capacity and strategic location. The country recently rose to become the Association of Southeast Asian Nations (ASEAN) champion with an estimated 40% of all ASEAN exports to North America being from the country alone. Though it is difficult to quantify how many businesses have relocated from China, BBC reports that major brands like Puma, Nike, and Adidas have already moved production to Vietnam. Sources from Vietnam Briefing indicate Intel and Samsung have rapidly ramped up their investment in Vietnam and are projected to reach $100 billion in revenue by 2050. Propelled by robust exports and foreign investments, Vietnam’s economy has recently grown by 7.09%, reaching $476.3 billion—outpacing the 5.05% expansion seen in 2023.

It is debatable whether Trump’s glare will graze upon this nation. Experts debate whether he will target Vietnam with tariffs, as his trade policies often focus on countries with a trade surplus. In 2024, Vietnam held the third-largest trade surplus with the United States at $104.6 billion, accounting for nearly 30% of its total exports. This substantial trade imbalance makes Vietnam a potential target for Trump’s tariff threats. In this scheme, the nation might experience radical changes due to trade balances, exchange rates, supply chains, and foreign direct investment (FDI). However, Vietnam is more likely to benefit from US-imposed tariffs. This prediction is supported by trends from Trump’s first term when the country experienced significant economic growth due to an influx of manufacturers and factories relocating to Vietnam. 

Despite lingering skepticism, Trump has maintained a favorable view of Vietnam. As early as 1980, Trump publicly opposed the Vietnam War and visited the country twice during his first term. His business ventures have also extended to Vietnam, with his organization partnering with Kinh Bac City Development Holding Corporation (KBC) to develop a $1.5 billion complex in Hung Yen Province. Meanwhile, his new confidante, Elon Musk, has positioned Vietnam a key production hub for SpaceX’s Starlink satellite internet project, shifting suppliers and manufacturing from Taiwan to Vietnam to reduce geopolitical risks.

Reversing these investments may be impractical or simply too late. The confidence that both Trump and Musk have placed in Vietnam highlights the country’s growing role in global supply chains. Amid rising geopolitical tensions, Vietnam’s diplomatic strategy—often referred to as the “bamboo policy” for its balance of resilience and adaptability—has strengthened its international position. As long as the country continues to wisely navigate political and diplomatic negotiations and steer clear of populist pitfalls, Vietnam is well-positioned to sustain its economic growth and global influence.