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Vietnam awaits wrath of Trump's tariffs. Korean firms stand to lose, too.

Published: 09 Mar. 2025, 18:50 Updated: 09 Mar. 2025, 19:17

LEE JAE-LIM
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Vietnam's Prime Minister Pham Minh Chinh addresses a joint press conference with the Polish Prime Minister after their meeting in Warsaw on Jan. 16. [AFP/YONHAP]

The looming threat of U.S. tariffs poses a growing concern for Vietnam, a key trade partner of the United States after China and Mexico. But any potential levies could also impact Korean conglomerates like Samsung Electronics and LG Electronics, which rely on major manufacturing bases in the country for global production.

Vietnam recorded a $123.5 billion trade surplus with the United States in 2024 — more than double Korea’s surplus figure in the same period, according to data from the Ministry of Trade, Industry and Energy on Sunday.

Since taking office on Jan. 20, U.S. President Donald Trump has swiftly announced or hinted at tariff measures against China and Mexico, the two countries with the largest trade surpluses with the United States. Vietnam, which ranks third, has yet to be mentioned in any tariff plans, leaving the country in suspense as it awaits a potential decision.

“Trump has not hesitated to threaten tariffs against China, Mexico, Canada, Europe and even U.S. allies like Japan and Korea,” said Jang Sang-sik, head of trade trend analysis at the Korea International Trade Association. “However, he remains silent on Vietnam. This may be because the country is seen as an alternative supply chain to China amid U.S.-China tensions.”

Although Vietnam appears to have temporary immunity, it remains vulnerable to potential U.S. sanctions that, in turn, could also impact Korea’s leading manufacturers. Samsung Electronics, LG Electronics and Hyosung depend heavily on their Vietnamese production facilities for smartphones, refrigerators and tire cords. Since these products are classified as Vietnamese exports, they too would be subject to U.S. tariff measures if imposed.

Samsung Electronics operates four production plants in the Southeast Asian country, including the company's largest smartphone manufacturing hub, Samsung Electronics Vietnam Thai Nguyen. Samsung Vietnam's major factories accounted for more than one-fourth of the company's total global sales in 2024, coming in at $56.3 billion.

LG Electronics Vietnam Hai Phong, which produces smartphones, TVs and household appliances, reported revenue of $2.94 billion up until the third quarter of 2024, up 11 percent on year. Hyosung, the chemical and textile-focused conglomerate, recorded $3.7 billion in revenue in the country in 2023.

Vietnam moved quickly to get out in front of the potential threat, strengthening its diplomatic efforts to ease trade tensions with the United States.

On March 1, Vietnam’s prime minister, Pham Minh Chinh, invited executives from 38 major U.S. companies to a meeting in Hanoi, emphasizing that the country is working to increase its investment in the United States and improve the trade imbalance with the Washington with a review of potential imports, from aircraft and arms to liquefied natural gas, agricultural goods and pharmaceutical products.

Chinh also said during the meeting that the government is working to expedite licensing approval for Elon Musk’s Starlink satellite internet service in Vietnam while allowing the U.S. company to keep full ownership of its local subsidiaries.

This move signifies a shift in Vietnam’s policy, as the country previously required foreign companies to establish joint ventures with local firms to operate satellite services.

Reuters reported on Feb. 18 that this change represents “an olive branch” to SpaceX as the country is still susceptible to reciprocal tariffs from Trump.

BY KIM KI-HWAN [[email protected]]