Chinese investment surge in Vietnam risks Trump’s tariff retaliation

Chinese companies are fueling almost one in three new investments in Vietnam, a sign of how they are moving their operations abroad to avoid Donald Trump’s trade war.

But the shift could increase Vietnam’s vulnerability to tariffs as Trump targets countries with large trade surpluses with the US.

Vietnam has been one of the biggest beneficiaries of trade tensions between the world’s two largest economies. Its trade surplus with the US reached $123.5 billion last year, the third largest after China and Mexico.

Part of this was due to exports from companies such as Apple and Intel, which moved production lines from China to Vietnam to spread supply chain risks and avoid punitive tariffs.

But Vietnam is also increasingly receiving investment from Chinese companies. From 22% of new projects in 2023, this proportion rose to 28% last year.

Meir Tlebalde, CEO of Sunwah Kirin Consulting Vietnam, which advises foreign investors, told the Financial Times that Chinese capital is still turning to Vietnam, even though it is no longer cheap.

He noted that most Chinese manufacturing investments in Vietnam were made to avoid US tariffs and to obtain a different ‘certificate of origin’ for goods produced by Chinese companies.

But Vietnam’s supply chain is still heavily dependent on China. “At least half of the raw materials come from China,” Tlebalde said.

In the first month of 2025, Chinese companies accounted for 30% of projects, according to the latest government data. Analysts said Chinese investments also came via Hong Kong and Singapore, and these two countries were the top investing countries in Vietnam in dollar terms last year.

The surge in Chinese investment in Vietnam and its dependence on Chinese raw materials could attract the attention of the Trump administration, which has accused Beijing of circumventing tariffs by shipping goods through third countries.

Vietnam, like many other countries, is vulnerable to Trump’s threats of reciprocal tariffs on US trading partners. Trump has also threatened to impose a 25% tariff on steel imports, which could hit Vietnam, the fifth largest supplier of metals to the US.

High tariffs would have a major impact on the Vietnamese economy, discouraging investment and hampering one of the world’s fastest growth rates. About 30% of Vietnam’s exports go to the US.

Recognizing the risks to his country, Vietnamese Prime Minister Pham Minh Chinh told Davos last month that Hanoi was developing ‘political and economic solutions’ to address the trade imbalance.

He added that Vietnam would buy between 50 and 100 airplanes and other high-tech US equipment from Boeing over the next 10 years and agreed to play golf with Trump ‘all day long’ if necessary.

This month, Trade Minister Nguyen Hong Dien said Vietnam is willing to increase agricultural imports from the US and will not implement any measures to restrict trade with the US.