Vietnamese businesses under Trump 2.0: Trade and tech challenges

Vietnamese businesses under Trump 2.0: Trade and tech challenges

Donald Trump's second term promises significant changes in trade and technology, urging Vietnamese businesses to prepare to overcome challenges and seize opportunities for growth.

The second term of President Donald Trump, with his "America First" commitment and strong protectionist policies, is expected to reshape global trade while introducing significant changes to the technology landscape. These impacts present both opportunities and challenges for Vietnamese businesses.

Text blocks spelling T, A, X on a table Trump's new tariffs could create significant challenges for Vietnamese businesses.

Experts from RMIT University Vietnam have provided in-depth analyses to guide Vietnamese businesses in navigating this volatile period.

Volatility in trade, exchange rates, and cryptocurrency

One of the most immediate challenges Vietnamese businesses faces is the fluctuation of the USD/VND exchange rate. According to Dr Nguyen Nhat Minh, a lecturer from The Business School, Trump's domestic economic policies—such as boosting production and reducing imports—are likely to strengthen the USD. This increase could drive up import costs for raw materials and reduce profit margins for Vietnamese exporters.

calculator and dollar notes USD/VND fluctuations could increase pressure on import and export costs.

Beyond trade, cryptocurrency is another area significantly influenced by Trump’s administration. According to Dr Nguyen Tan Son, new policies could foster a more favourable environment for Bitcoin and other digital assets, including tax exemptions on capital gains and the establishment of a national Bitcoin reserve. While the US could become a global hub for cryptocurrency, many other nations remain cautious, creating polarisation in the market.

For Vietnamese businesses, opportunities to engage in this sector are evident, particularly with the growing demand for blockchain technology and digital transactions. However, risks from high market volatility and inconsistent regulatory frameworks across countries require businesses to be thoroughly prepared to avoid pitfalls in an increasingly dynamic global business environment.

Challenges from supply chain shifts and technology

The shift in supply chains away from China, triggered by Trump’s tariff policies, presents both opportunities and challenges for Vietnam. According to Associate Professor Pham Thi Thu Tra, an economist at RMIT Vietnam, Vietnam stands out as an attractive destination due to its low labour costs and open investment environment. However, she emphasises that if Vietnamese businesses remain focused on low-value assembly and manufacturing, the added value to the economy will be minimal.

Dr Scott McDonald from RMIT Vietnam’s Supply Chain Management discipline underscores that this supply chain shift is not a natural opportunity that businesses can exploit effortlessly. Competing on cost alone is no longer sufficient—businesses must move towards value-based competition. This requires not only upgrading production processes but also establishing a direct presence in the US market through representative offices or distribution centres. However, such moves come with high investment costs and risks from policy volatility.

computer screen with coding Vietnam could face hurdles as the US limits access to cutting-edge technologies.

In addition to supply chain pressures, technology—critical for improving production efficiency—is also heavily impacted by US policies. According to Dr Sreenivas Tirumala from the School of Science, Engineering & Technology, fields such as artificial intelligence (AI), cybersecurity, and automation in Vietnam could face setbacks due to restricted access to advanced technologies from the US. The "America First" policy prioritises domestic technology production, limiting the transfer of technologies via US companies operating internationally.

Furthermore, dependence on US technology suppliers poses another risk. In a restricted environment, Vietnamese businesses must seek alternative technology sources from other nations, which is not only costly but also slows the modernisation of supply chains.

Flexible in the short term, ready for the long term

The challenges in trade, technology, and cryptocurrency during Trump’s second term require Vietnamese businesses to act immediately. Experts stress that managing financial risks, improving supply chains, and optimising technology management are essential steps to ensure short-term stability. However, immediate actions are only the beginning.

In the next part, we will explore long-term strategies to help Vietnamese businesses not only overcome these challenges but also enhance their positions in the global value chain.

Story: Quan Dinh H.

08 December 2024
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