US Tariffs Pose Challenges for Vietnam’s Steel and Aluminium Industries

A new 25 per cent tariff on steel and aluminium imports imposed by US President Donald Trump, effective from 4 March, is set to create significant hurdles for Vietnamese exporters. While Vietnam is not the largest supplier of these materials to the US, the policy—aimed at protecting American domestic industries—will nonetheless impact key sectors of Vietnam’s economy, particularly aluminium producers already grappling with competitive pressures.

The tariff announcement has sparked concern among Vietnamese businesses, industry experts, and trade authorities, who are now assessing the potential fallout and exploring strategies to mitigate losses. Though the US market accounts for only a fraction of Vietnam’s total steel and aluminium exports, the sharp increase in tariffs—from a previous 10 per cent on aluminium to the current rate—could erode profit margins and force companies to rethink their pricing and market strategies.

Steel Sector Faces Manageable Impact

According to the Vietnam Steel Association (VSA), the US ranks as the third-largest export market for Vietnamese steel, contributing around 13 per cent of the country’s total steel export turnover. While this level of dependence is not critical—lagging behind ASEAN and the European Union as primary markets—the new tariffs are expected to create ripples for major producers such as Hòa Phát Group, Hoa Sen, and Nam Kim Steel.

Trương Hiền Phương, Senior Director at KIS Việt Nam Securities, offered a measured perspective in an interview with baodautu.vn. He suggested that while the tariffs will undoubtedly affect Vietnamese steel exports, the impact is unlikely to be severe. “The US does not constitute the majority of our steel export revenue,” Phương noted, adding that companies have alternative markets to offset potential declines in US sales.

Economic analyst Đinh Trọng Thịnh echoed this sentiment, arguing that the steel industry might even find opportunities amid the policy shift. With many countries previously benefiting from lower tariff rates now facing the same 25 per cent levy, Vietnam’s steel exporters could find themselves on a more level playing field. Thịnh pointed out that this parity might allow Vietnamese firms to maintain their foothold in the US market, provided they adapt swiftly to the changing trade landscape.

Aluminium Industry Under Greater Strain

In contrast, the outlook for Vietnam’s aluminium sector appears more challenging. The US had previously imposed a 10 per cent tariff on aluminium imports, a rate at which Vietnamese exporters could remain competitive. However, the jump to 25 per cent is likely to exacerbate cost pressures, potentially pricing some companies out of the market.

Trương Hoàng Nam, Director of EuroHa Joint Stock Company—a leading aluminium exporter to the US with an annual turnover exceeding US$7 million—expressed deep concern over the tariff hike. “At 10 per cent, we could still compete,” Nam explained. “But at 25 per cent, the higher production costs might lead to losing customers.” EuroHa is currently collaborating with the Vietnam Aluminium Association and the Trade Remedies Authority of Vietnam to evaluate the situation and identify solutions to cushion the blow.

Industry experts warn that reduced demand in the US could force aluminium exporters to slash prices or seek alternative markets, both of which come with their own set of challenges. Thịnh acknowledged that the tariff increase places Vietnamese aluminium businesses under significant strain, as they may need to overhaul their pricing strategies to retain customers or absorb losses to stay competitive.

A Broader Challenge with Global Implications

The US tariff policy is not uniquely targeted at Vietnam; it applies uniformly to all exporting nations, including major players like the EU, Canada, and Mexico. This broad application means that Vietnam’s competitiveness is not disproportionately undermined compared to other countries. However, the policy still poses a test of resilience for Vietnamese exporters, who must navigate an increasingly protectionist global trade environment.

Dương Đức Quang, Deputy General Director of the Vietnam Commodity Exchange (MXV), urged exporters to remain calm and adopt proactive measures. He emphasized the importance of enhancing internal capabilities, such as improving production efficiency and investing in advanced technologies to create higher-value aluminium products. Quang also advocated for closer collaboration with government agencies to address trade policy challenges and mitigate the tariffs’ impact.

Diversifying export markets is another key recommendation from industry leaders. Quang advised companies to focus on countries with free trade agreements with Vietnam, which could offer more favorable terms and reduce reliance on the US market. Vietnam has secured numerous such agreements in recent years, including pacts with the EU and members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), providing potential avenues for redirecting exports.

Thịnh added that boosting domestic consumption could serve as a long-term buffer against external shocks. By developing the domestic market for steel and aluminium, Vietnam could reduce its dependence on major export destinations like the US. He also highlighted the need to optimize logistics and lower production costs to enhance overall competitiveness, ensuring that Vietnamese firms remain agile in the face of global trade disruptions.

Opportunity Amid Adversity

Despite the immediate challenges, some analysts see the US tariffs as a potential catalyst for transformation within Vietnam’s steel and aluminium industries. The policy could push companies to innovate, streamline operations, and explore untapped markets, ultimately strengthening their resilience. Thịnh argued that while the tariffs present a hurdle, they are not an insurmountable barrier, especially given that Vietnam remains competitive on a global scale due to the universal application of the policy.

The broader context of US-Vietnam relations also offers a glimmer of hope. US Ambassador to Vietnam Marc Knapper recently reaffirmed Washington’s commitment to its trade partnership with Hanoi. Speaking ahead of the 30th anniversary of diplomatic relations between the two nations in 2025, Knapper expressed optimism about deepening economic cooperation. His comments suggest that while specific policies like the tariffs may strain certain sectors, the overall trajectory of bilateral ties remains positive.

Navigating an Uncertain Future

For now, Vietnamese steel and aluminium exporters face an uncertain path as they adapt to the new tariff regime. The steel sector appears better positioned to weather the storm, thanks to its diversified markets and relatively low reliance on the US. However, aluminium producers confront a steeper challenge, with the 25 per cent tariff threatening to undermine their competitiveness and squeeze profit margins.

The coming months will be critical as companies reassess their strategies and seek support from industry bodies and government agencies. Investments in technology, market diversification, and domestic demand could provide the lifeline needed to offset losses in the US market. At the same time, Vietnam’s ability to maintain its global competitiveness will depend on how effectively it responds to this latest trade barrier.

As the 4 March implementation date approaches, all eyes are on Vietnam’s response. The tariffs may test the mettle of its exporters, but they also offer an opportunity to rethink and rebuild for a more resilient future. Whether this challenge becomes a turning point for the country’s steel and aluminium industries remains to be seen, but the determination to adapt and overcome is already evident among stakeholders.