Close up on factory worker in Vietnam
No country has grown more as a manufacturing economy over the past 15 years than Vietnam. But in that time, it has also become increasingly dependent on demand from the United States, which contributed to more than a quarter of its economy last .
“Everyone is living in great uncertainty now,” said Tran Nhu Tung, chairman of Thanh Cong, a Vietnamese garment manufacturer with factories and a mill in five locations. Its 6,000 workers make clothes for Eddie Bauer, New Balance, Adidas and others.
Mr. Tung’s customers in the United States have started asking Thanh Cong to lower its prices. “This is a great pressure for the company because the profit margin is very low,” he said.
Soon after the tariffs were announced, the management team at Thanh Cong began to discuss other regions where it could sell its wares, like the Middle East and Europe. The company is also talking to its American customers to make sure they can afford hefty new import taxes.
“I don’t want to lay off people,” Mr. Tung said. “We try everything to keep our people here.”
Thanh Cong has gotten requests from some of its American retail customers to increase production, and the company is trying to accommodate that. Mr. Tung is optimistic that his government can strike a deal with the Trump administration. Whatever the two countries settle on will matter for the future of his business.
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Tran Nhu Tung, wearing jeans, sneakers and white polo shirt with a yellow collar and trim, sits on a green cube ottoman in front of a wall full of framed citations on shelves.
Tran Nhu Tung, chairman at Thanh Cong Textile Garment. The company makes apparel for American brands like Eddie Bauer and New Balance.Credit…Linh Pham for The New York Times
Hours after Mr. Trump announced reciprocal tariffs on nearly 60 countries, Vietnam’s top leader, To Lam, called him and offered to reduce tariffs on American imports to zero, urging the United States to follow. He then sent a letter to Mr. Trump, requesting a meeting in person with the president in Washington at the end of May to “jointly come to an agreement.”
Mr. Tung, who is also the vice chairman of the Vietnam Textile and Apparel Association, said the breaking point for most factories would be a final tariff that was much more than 20 percent.
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Garments from Vietnam are currently taxed at nearly 28 percent. This includes a new tariff of 10 percent that the Trump administration placed on all countries on April 2, in addition to an existing tariff of roughly 18 percent on all Vietnamese garments. A final tariff of 20 percent or more would eat deeply into the profits of both factories and their customers.
“In this scenario, the factory has to reduce its net margin, and then the big buyers from the U.S. would have to reduce their margins and the consumers will have to pay more for their garments,” he said.
While things look bad for Vietnam, there is some hope that it will fare better than its neighbor to the north, China, which has been hit especially hard by U.S. tariffs. China’s loss could be Vietnam’s gain. But a failure to substantially lower the 46 percent figure would be a moment of reckoning for thousands of Vietnamese companies that make things to ship to the United States.
At factories across Vietnam, workers remain anxious about the potential impact of President Trump’s tariffs, which have been paused for 90 days.Credit…Linh Pham for The New York Times
For Mian Apparel, it is the uncertainty that is most worrying. Its seven factories and two laundries, mostly in northern Vietnam, employ 12,000 workers who make swimwear, jeans and jackets for brands like Costco, J.C. Penney, Carter’s, Target, Gap and Walmart.
“Uncertainty is not good for business,” said Vu Manh Hung, deputy chief operating officer of Mian Apparel. Clients are pushing him to deliver goods faster. The factories are taking on more workers and finding other ways to produce more before the 90-day pause in tariffs ends.
Tran Quang, an executive at a candle and home fragrance company, said he had not had to fire any workers at his company’s three factories.
But he is anxious because the next few months are normally peak season for his company, which he requested not be named. This is when his factories are filling orders for the Christmas season. Instead of hiring more workers as he usually does around this time, Mr. Quang is holding tight.
Some 90 percent of his company’s customers are in the United States. For weeks after the tariffs were announced, he heard nothing from them. It was unnerving because orders typically come in weekly. In recent days, some clients have begun to cancel orders while others are holding off on new ones.
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Some experts have said that if the United States and Vietnam cannot come to an agreement, the Trump administration could extend the pause in tariffs.
For the factories and their workers, this would be just as bad as a high tariff.
“If there is an uncertainty, customers may redirect their supply chain,” Mr. Quang said. “Why should they wait for another 90 days? What if the result is bad?”
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A man wearing a baseball cap peddles on a bicycle past an apparel market with about a round racks of shirts and other tops.
A market on the outskirts of Ho Chi Minh City near worker tenements and factories.Credit…Linh Pham for The New York Times
Alexandra Stevenson is the Shanghai bureau chief for The Times, reporting on China’s economy and society.
Source:New York Times
