Vietnam Faces Higher US Apparel Tariffs Than Key Asian Rivals

Vietnam, the largest apparel exporter to the United States, is set to face a higher tariff rate than its regional competitors under new U.S. trade measures targeting alleged lax enforcement of forced labor bans. The move could disrupt the supply chains of major international brands and reduce the competitiveness of Vietnam's crucial garment sector.

New Tariff Structure

According to a Federal Register notice published Thursday, the new tariffs will take effect on Friday and apply to 60 trading partners. The measures replace temporary 10% tariffs imposed by the Trump administration that were set to expire.

• Vietnam will be subject to a 12.5% tariff rate, the same level applied to China.
• Competing apparel exporters, including Bangladesh, Cambodia, Indonesia, and Malaysia, will face a lower 10% duty.

These measures follow a U.S. Supreme Court decision in February that struck down previous "reciprocal" duties introduced under emergency powers, according to the source report.

Competitive Disadvantage

Ad

The new trade rules place Vietnam at a dual disadvantage. Beyond the higher tariff rate, the country is also excluded from a new "textile mechanism" designed to benefit its competitors. This mechanism, to be established "when feasible," could allow Bangladesh, Cambodia, Indonesia, and Malaysia to have a portion of their apparel exports qualify for reduced or zero additional tariffs.

Eligibility for this tariff relief is linked to a quota system based on the countries' purchases of U.S. cotton and textile inputs, according to the notice. Vietnam was not named as a beneficiary, further widening the competitive gap.

Market Implications

Vietnam overtook China last year to become the leading supplier of apparel to the U.S. market, and it maintains one of the largest trade surpluses with Washington. The new tariff structure poses a significant challenge to this position and could impact major apparel companies that rely heavily on Vietnamese manufacturing.

Top investors in Vietnam's garment industry include Nike, Gap, Ralph Lauren, and Under Armour. The companies did not immediately respond to requests for comment on the new tariffs, Reuters reported. Vietnam’s foreign and trade ministries also did not provide an immediate response.