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Times Catalog > Blog > News > What Samsung and Vietnam stand to lose in Trump’s tariff war
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What Samsung and Vietnam stand to lose in Trump’s tariff war

Usama
Last updated: April 12, 2025 7:48 pm
Usama
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What Samsung and Vietnam stand to lose in Trump's tariff war
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In July, during a high-profile meeting with Vietnamese Prime Minister Pham Minh Chinh, Samsung Electronics Chairman Jay Y. Lee delivered a powerful message:
“Vietnam’s success is Samsung’s success, and Vietnam’s development is Samsung’s development.”

Contents
Vietnam: Samsung’s Manufacturing BackboneTariff Turmoil: A Looming ThreatManufacturing Under PressureVietnam’s Broader Manufacturing HeadacheNervous Eyes on the Factory FloorA Shifting LandscapeConclusion: Uncertainty Ahead

This statement was more than corporate courtesy. It underscored the deep, strategic ties between the South Korean tech giant and Vietnam—a relationship built over decades and now potentially at risk due to escalating trade tensions between the United States and its global partners.

Vietnam: Samsung’s Manufacturing Backbone

Since Samsung entered Vietnam in 1989, the company has poured billions of dollars into transforming the Southeast Asian nation into a manufacturing powerhouse. The move was initially part of a strategy to diversify beyond China, especially after former U.S. President Donald Trump imposed sweeping tariffs on Chinese goods during his first term.

Vietnam’s low-cost labor, strategic location, and business-friendly policies made it an ideal hub. Today, Samsung is the largest foreign investor and exporter in the country. Approximately 60% of the 220 million smartphones Samsung sells globally each year are assembled in Vietnam, many of which are shipped to the U.S., where the brand ranks as the second-largest smartphone vendor, according to Counterpoint Research.

But as the Trump administration ramps up trade pressure once again, Vietnam—and by extension, Samsung—may find themselves caught in the crossfire.

Tariff Turmoil: A Looming Threat

The U.S. is now considering a potential 46% tariff on Vietnamese goods, a dramatic increase that has sparked anxiety throughout the country’s manufacturing sector. Although a 90-day pause brought temporary relief, the threat remains very real. According to more than a dozen interviews conducted by Reuters, Samsung is likely to be one of the hardest-hit companies if the full tariff package is enacted in July.

“Vietnam is where we produce most of our smartphones, but the tariffs initially came out much higher than expected,” admitted a Samsung executive, speaking anonymously due to the sensitive nature of the topic. “There’s a real sense of confusion internally.”

Even if negotiations between Hanoi and Washington succeed in lowering the tariff rate to somewhere between 22% and 28%, Vietnam’s roughly $120 billion trade surplus with the U.S. remains a major point of contention for the Trump administration.

Manufacturing Under Pressure

The uncertainty is already forcing Samsung and its supply chain partners to consider contingency plans. Four insiders familiar with the matter said the company is evaluating options to adjust its production strategy—possibly by increasing output in India or South Korea.

However, such shifts come with significant challenges. For example, while Samsung operates a facility in Gumi, South Korea, it’s currently not equipped to handle the scale of smartphone production required for the U.S. market. Similarly, India’s infrastructure and supply chain limitations mean it can only manage about 20% of Samsung’s total output at present. Expanding capacity would require time, investment, and logistical reconfiguration.

Samsung has declined to comment on how it plans to respond specifically to the U.S. tariff threat. The company has only reiterated its commitment to flexibility within its global supply chain strategy.

Vietnam’s Broader Manufacturing Headache

Samsung is not alone in facing these challenges. Other multinationals like Apple—which imports around 80% of its U.S.-sold iPhones from China—are also under pressure. Apple, facing even steeper tariffs of 145%, has remained silent on how it will navigate this storm.

Meanwhile, Vietnam’s reputation as a safe haven for manufacturing is beginning to crack. Once seen as the prime alternative to China, Vietnam now faces:

  • Energy Shortages: A rapid industrial boom has outpaced the country’s power grid capabilities.
  • Higher Tax Burdens: New OECD-aligned tax rules have ended earlier tax incentives for foreign firms.
  • Labor Market Strains: The influx of foreign companies has created a shortage of skilled workers and driven up wages.

These combined pressures are starting to dull Vietnam’s low-cost manufacturing appeal. As some economists warn, “Vietnam’s loss could be India’s gain.”

India is actively pursuing a trade agreement with the U.S., with the first phase expected to conclude by the end of the year. A more favorable business environment there could shift investment momentum away from Vietnam.

Nervous Eyes on the Factory Floor

Among foreign businesses operating in Vietnam, there’s a growing sense of anxiety. Ko Tae-yeon, chairman of the Korea Chamber of Business in Vietnam, said the initial tariff announcement caused widespread “panic.” Some companies even started planning workforce reductions, though many have since paused to monitor developments.

“There’s a wait-and-see approach now,” said Ko, who also serves as director general at Heesung Electronics, a supplier to LG Display.

For workers on the ground, the uncertainty is deeply personal.

“I’m afraid they may cut everything,” said Nguyen Thi Hao, a 39-year-old employee at a Samsung plant in Thai Nguyen, north of Hanoi.

A Shifting Landscape

Samsung’s Vietnamese operations account for roughly $54 billion in exports, making up about 15% of Vietnam’s total exports, according to government estimates. The company also manufactures TVs, home appliances, and display screens in the country.

Should the tariffs materialize in full, and if Samsung is forced to scale down its operations, the ripple effects across Vietnam’s economy could be severe—from lost jobs to shrinking GDP growth to weakened investor confidence.

Conclusion: Uncertainty Ahead

As geopolitical tensions and protectionist policies reshape the global trade map, the deep ties between Samsung and Vietnam are being put to the test. What once seemed like a safe and strategic partnership is now facing turbulent waters.

For Samsung, the challenge lies in reconfiguring its global supply chain to mitigate risk. For Vietnam, the stakes are even higher: preserving its hard-won reputation as a reliable manufacturing hub and avoiding becoming collateral damage in a war it never started.

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