Vietnam’s Textile Industry Confronts Challenges from US Tariffs and Middle East Instability

Vietnam’s textile and garment sector is encountering mounting pressures from a combination of US tariffs, escalating shipping costs, and geopolitical tensions in the Middle East, casting uncertainty over export performance in the latter half of 2024.

According to a recent report by Vinatex, Vietnam’s textile and garment exports totaled USD 18.8 billion during the first five months of the year, marking a 5.6% increase compared to the same period in 2023. This growth reflects the sector’s adaptability and ability to capitalize on market opportunities, even as the United States maintained an additional 10% tariff on imports until July 24.

Vinatex’s consolidated revenue for the first half of 2024 reached approximately VND 9.77 trillion (around USD 375 million), representing a 6.5% increase year-over-year. Profitability also improved, with profits rising 14.4% to VND 763 billion (approximately USD 29.3 million). The yarn segment contributed VND 205 billion (about USD 7.9 million), achieving 82% of its annual target.

Despite these positive indicators, meeting the industry’s ambitious full-year export target of USD 48-49 billion remains challenging. To reach this goal, the sector must sustain an average monthly export value between USD 4.31 billion and USD 4.46 billion over the remaining seven months, a demanding prospect given the prevailing uncertainties in global markets, tariff policies, and consumer demand.

Hoang Manh Cam, chief of the office of Vinatex’s board of directors, noted a slowdown in new orders beginning in July. He attributed this trend to importers’ cautious stance amid the temporary US tariff regime, which has been in place for roughly 150 days. Buyers are reportedly awaiting the outcome of tariff negotiations and trade policy decisions expected after July 24 before committing to new orders.

Vinatex executives identified two principal factors shaping the textile and garment market outlook for the second half of 2024. The first is the geopolitical tension stemming from the Middle East conflict, which has driven up oil prices and maritime shipping costs. Shipping companies have responded by imposing additional insurance surcharges, alternative route fees, and risk-related charges, directly impacting exporters’ costs. Furthermore, rising energy prices contribute to inflationary pressures in major economies, dampening consumer demand for apparel products.

The second critical factor is the evolving US tariff and trade policy landscape. Beyond negotiating new tariff arrangements with various trading partners, the US government is conducting investigations related to labor practices, intellectual property rights, and other trade concerns. This regulatory uncertainty has led many importers to delay finalizing orders until clearer policy directions emerge.

Despite these short-term headwinds, Vinatex remains optimistic about Vietnam’s role in the global textile supply chain. The country’s established reputation among international buyers continues to position it as a preferred sourcing destination.

"Although strong growth in the second half of the year may be difficult to achieve, the textile and garment industry is likely to maintain stability and avoid a sharp decline in key export markets, particularly the United States," Cam stated.

Looking ahead to the 2026-2030 period, Vinatex plans to focus on enhancing competitiveness through green transformation initiatives, expanding textile and dyeing supply chains, and developing a green, smart, and circular manufacturing ecosystem to sustain long-term industry growth.