Vietnamese businesses seek new ways in the face of US tax hikes

Textile and wood product exporters in Ho Chi Minh City are actively preparing to face the possibility of the US increasing import tariffs, especially on goods from China. This is both an opportunity and a challenge for Vietnamese enterprises as many units import raw materials from China.

Find new sources of raw materials

In 2024, Ho Chi Minh City’s textile and wood processing exports will grow strongly, reaching 11% to 20% over the same period last year. Of which, the US market accounts for 40% to 50% of the total export value of these two industries.

Many textile and garment enterprises in Ho Chi Minh City are diversifying their sources of raw materials – Photo: Enterprise provided

Mr. Pham Van Viet, General Director of Viet Thang Jean Company, said that since September 2024, the export market to the US has recovered well, helping the company achieve a growth rate of 16% compared to 2023. Currently, the company has export orders until June 2025, mainly for the US market.

Faced with the possibility that the US could increase import tariffs on Chinese textiles from 50% to 60%, Viet Thang Jean has proactively sought raw material sources from countries such as Pakistan, Türkiye and Thailand… these countries, even if subject to increased tariffs, still have tariffs about 40% lower than China. At the same time, the company has also invested heavily in tracing the origin of raw materials to meet strict US regulations.

“Currently, US technical barriers are very clear and transparent. Enterprises must fully declare the supply chain links, from the origin of cotton to the production process. If raw materials from China are brought into production in Vietnam, enterprises must specifically declare. This helps prevent Vietnamese goods from being “disguised” to benefit from taxes,” Mr. Pham Van Viet shared.

Worry about Chinese businesses “hiding behind”

Ho Chi Minh City’s wood product exports in 2024 will increase by 20% compared to the previous year. Many wood processing enterprises have recorded remarkable growth thanks to the positive recovery of the US and European markets. Nghia Son Furniture Company Limited in Thu Duc City is a typical example, with an export growth of 30% compared to the same period last year. The enterprise currently has orders until April 2025.

Mr. Huynh Le Dai Thang, Director of Nghia Son Furniture Company Limited, said that the company takes advantage of domestic raw materials such as yellow acacia wood to reduce dependence on China. However, he expressed concern about the risk of Chinese enterprises “hiding behind” production in Vietnam, causing unfair competition and affecting the reputation of Vietnamese goods.

“Authorities need to conduct strict controls to avoid Chinese goods being “disguised” as Vietnamese goods for export. If the US investigates and discovers violations, the consequences could be very serious for Vietnam’s wood processing export industry,” Mr. Thang suggested.

Many businesses are concerned that if authorities do not strictly control the investment shift of wood processing enterprises from China, they will face unfair competition – Photo: Provided by businesses

Diversified sources of raw materials

Some wooden furniture manufacturers using wood, plywood and raw materials imported from China are facing the risk of being subject to high taxes. Currently, raw materials from China account for about 25% of their production structure. Mr. Nguyen Chanh Phuong, Vice President and General Secretary of the Handicraft and Wood Processing Association of Ho Chi Minh City (Hawa), commented that if the US increases import taxes on wood products, Vietnamese enterprises will still have an advantage because Vietnam’s current tax rate is 0%, compared to China’s rate of 25%. However, if import taxes on raw materials increase, enterprises that rely heavily on raw materials from China will face difficulties.

“Enterprises need to diversify their raw material supply sources. Vietnam can import plywood and raw materials from countries like Thailand and Indonesia – these countries have strengths in plywood supply. Currently, many Vietnamese textile and wood processing enterprises import raw materials from China, accounting for about 20-30% of total raw material sources,” said Mr. Nguyen Chanh Phuong.

The US import tax increase is only a prediction at present, but Vietnamese enterprises need to be ready to face the changes. To increase competitiveness, enterprises must diversify their raw material supply, improve product quality and meet international technical standards.

On the part of the authorities, it is necessary to strictly control investment and prevent the situation of “hiding behind” and “disguising” origin. This not only protects the reputation of Vietnamese goods but also helps the textile and wood processing industries maintain sustainable development in the international market.

Source: https://vov.vn/