Vietnam's Prominence in the Shifting Landscape of America's Supply Chain

A recent analysis reveals that Vietnam accounts for a significant share of U.S. imports as the country alters its supply chain.

According to research by the Brookings Institution (USA), the return of manufacturing operations to the United States has become a primary emphasis of the policies of both President Joe Biden and his predecessor, Donald Trump. President Biden underlined in his 2022 State of the Union address, "Do it in America instead of relying on foreign supply chains."

The White House has enacted several restrictions on exports. During 2018, President Trump's administration has enacted numerous protectionist policies for steel and aluminum and slapped high tariffs on roughly half of the Chinese imports. Since then, sufficient time has passed to assess the effectiveness of these actions.

Vietnam's exports account for a substantial share

In recent years, the United States has transferred imports of a variety of products to Southeast Asian nations, particularly semiconductor components and telecommunications equipment. As the amount of Chinese commodities in US imports declined, the proportion of goods from other Asian nations, such as Vietnam, climbed correspondingly (by 4 percentage points between 2018 and 2021). The growth noted above is due to a variety of products, including workwear, gloves, sports equipment, furnishings, and mobile phones.

Significantly, data conducted and published by Brookings demonstrates that the supply chain for the U.S. market has switched from China to other Southeast Asian nations, particularly Vietnam. Traditionally, the United States slapped significant tariffs on Chinese solar energy products in 2012, forcing China's solar panel shipments to the United States to plummet to virtually zero. Meanwhile, Southeast Asia's exports to the United States have surged, with Vietnam being one of the primary providers. The Brookings Institution's analysis demonstrates that while Vietnam has numerous advantages to increase exports to the United States, it also requires improvement in certain areas to continue expanding its role in the supply chain. Vietnam's exports to the United States surged by more than 130% between 2018 and 2022, from 47.5 billion USD to 109.4 billion USD.