In the bustling heart of Ho Chi Minh City, Vietnam, the atmosphere is thick with unease as businesses brace for potential economic turmoil. Kieu Quoc Thanh, CEO of SVC Group, a prominent cashew export company, recently expressed the growing anxiety pervasive among exporters in the region. His company, like many others, is caught in a precarious position as it awaits clarity on a looming 46 percent tariff on cashew imports to the United States. Everyone in my industry has been feeling crazy for the past two weeks, Thanh remarked, reflecting the turmoil that has gripped Vietnamese exporters since the announcement of U.S. tariffs.

The uncertainty stems from President Donald Trumps reciprocal tariffs, which were announced on April 2 and have since been paused for 90 days. While this brief respite has provided a glimmer of hope, the specifics remain murky. Currently, a baseline 10 percent tariff applies to imports from all countries, raising questions for Thanh and his clients in the U.S. regarding the final tax on his products. No one knows whats happening, he told Al Jazeera last week from his office, emphasizing the dire need for clarity.

This predicament is not just an isolated issue; it permeates the entire Vietnamese economy, which is heavily reliant on exports. The United States stands as Vietnams largest export market, accounting for a staggering 30 percent of the countrys gross domestic product (GDP) last year. Amidst this backdrop, discussions between Hanoi and Washington are underway, initiated on April 10, aimed at establishing a more favorable trade deal.

Tyler Manh Dung Nguyen, chief market strategist at Ho Chi Minh City Securities Corporation, described the current economic climate as one of extreme uncertainty. He likened the situation to a reality show where developments shift daily, leaving businesses like Thanhs in a constant state of anxiety. Its like a reality show; everything changes every day, Nguyen added, drawing attention to the unpredictable nature of international trade relations under the Trump administration.

The ongoing trade tensions contrast sharply with the historical evolution of U.S.-Vietnam relations, which have gradually improved over the years. In 2023, the two nations upgraded their ties to a Comprehensive Strategic Partnership, a significant milestone that seemed to pave the way for a more stable economic relationship. However, recent actions from the U.S. administration have raised concerns that this progress may be jeopardized.

Eddie Thai, a Vietnamese American entrepreneur and co-founder of Ascend Vietnam Ventures, expressed his dismay over the potential strains in diplomatic relations, especially with the upcoming 50th anniversary of the Vietnam War approaching on April 30. He described the situation as not entirely regressive, but burning a lot of goodwill that has been painstakingly cultivated since the 1990s. This sentiment underscores the personal stakes involved for individuals with ties to both nations.

As trade discussions unfold, the shadow of China looms over Vietnam. China is not only Vietnam's largest source of imports but also its second-largest export destination. The recent visit by Chinese President Xi Jinping to Hanoi, part of a larger tour of Southeast Asia, was seen as an attempt to position China as a more reliable trading partner than the U.S. During this visit, Xi received a warm welcome, including a 21-gun salute, and his discussions with Vietnamese leaders led to the signing of 45 agreements, although details remain scarce.

In a pointed remark, Trump reacted to Xis visit, suggesting that the bilateral talks might be an attempt to undermine U.S. interests. Thats a lovely meeting. Meeting like, trying to figure out, How do we screw the United States of America? he quipped, highlighting the competitive nature of international trade negotiations.

As the U.S. and China continue to impose tariffs on one another, Vietnam finds itself navigating a complex diplomatic landscape. Nguyen noted that Hanoi seeks to maintain a neutral stance, avoiding alignment with either country against the other. We do not side with one country to fight another country, he stated, emphasizing Vietnam's commitment to a balanced approach.

Complicating matters further, foreign businesses operating in Vietnam are also feeling the impact of U.S. tariffs. Bruno Jaspaert, general director of DEEP C Industrial Zones, warned of the impossibility of Vietnam erasing its trade deficit with the U.S., which is projected to be around $123.5 billion in 2024. Any country like Vietnam, in reality, has no leverage against the States, he lamented, pointing out the discrepancies between the two economies.

In light of these challenges, the Vietnamese government has actively sought to strengthen ties with the Trump administration. This includes pledging to purchase more U.S. products, such as Boeing airplanes and liquefied natural gas. Additionally, Vietnam has opened discussions regarding the acquisition of C-130 cargo planes from Lockheed Martin and has recently allowed Elon Musks Starlink satellite internet service to operate in the country on a trial basis.

Efforts to foster good relations were evident when To Lam, Vietnams Minister of Public Security, reached out to Trump shortly after the tariff announcement. Lam proposed reducing tariffs on U.S. goods to zero, emphasizing Vietnams commitment to maintaining access to the U.S. market. There is no alternative choice for Vietnam other than making peace with the U.S. to secure access to the U.S. market, remarked Nguyen Khac Giang, a visiting fellow at Singapores ISEAS-Yusof Ishak Institute.

Despite the inherent risks presented by the current trade environment, some analysts see potential opportunities for Vietnam amid the chaos. As businesses rush to maximize production within the window of the 10 percent tariff, there is a sense of urgency to deliver goods to the U.S. before further tariff increases. Jaspaert noted, Quite a few people are planning to ship out a lot 10 percent is still doable. This proactive approach reflects the resilience of Vietnamese entrepreneurs in the face of uncertainty.

Looking ahead, there are indications that Vietnam could benefit from the ongoing tensions between the U.S. and China. Under the Trump administration, Vietnam has experienced a significant influx of businesses relocating from China to mitigate geopolitical risks and trade barriers. Craig Martin, chairman of Dynam Capital, highlighted this trend, stating, You could actually see a silver lining, being people looking to do more in Vietnam.

As U.S. scrutiny continues regarding the importation of Chinese goods labeled as Made in Vietnam, there is pressure for the country to enhance its value-added manufacturing capabilities. Nguyen emphasized the importance of reaching an agreement between both governments to mitigate transshipment issues, which could ultimately lead to positive developments for Vietnams manufacturing sector in the long run.

To reinforce its position, Vietnam has indicated a willingness to crack down on the transshipment of Chinese goods into the U.S. This willingness to cooperate follows concerns raised by White House trade adviser Peter Navarro about the mislabeling of goods. As the U.S.-China trade conflict persists, the potential for Europe to enhance its trade with Vietnam arises, providing the country with an opportunity to diversify its economic partnerships. Vietnam has won all the wars its been in, so I believe it will also win the tariff war, concluded Jaspaert, expressing optimism about Vietnam's resilience.