When tariffs rise, supply chains get creative. An example? In the face of steep U.S. tariffs on Chinese exports, more trade is now flowing through Vietnam. And the growing Vietnam–U.S. trade surplus is fueling suspicions of rerouting.
Hanoi’s challenge now is to prove that most goods are genuinely made in Vietnam and not just relabeled, while engaging with a further pressure of the U.S administration.
Understanding the Reroute
Vietnam has been a major winner since the 2018 U.S.–China trade war. Exports to the U.S. surged, pushing the bilateral surplus to roughly $104 billion in 2023. Much of that boom rides on Chinese components feeding Vietnam’s factories, following a “China+1” model: maintain inputs from China, build parallel manufacturing in Vietnam, and ship from there. According to the Harvard Kennedy School’s Center for International Development, roughly 16 percent of Vietnam’s 2021 exports to the United States were flagged as potential rerouting at the product level.
The Global Supply Chain
Taking a look at the supply chain, one will see the usual process in action. Vietnam buys a lot of machinery, parts, and other goods from China. But it also sells a lot of goods to the U.S., so it has a big trade deficit with China, which was about $67 billion in 2024 alone. Over the same year, Vietnam’s exports to the U.S. reached approximately $120 billion, leaving a record surplus. This pattern fits the “China+1” story: Chinese parts in, value added in Vietnam, finished goods out to the U.S.
Critical Factors to Address
In 2019, Vietnam uncovered numerous fake certificates of origin and illegal transfers, further fueling Washington’s concerns and prompting then-President Trump to criticize Vietnam as a major “abuser” of trade. These episodes have contributed to the perception that certain companies are leveraging Vietnam as a means to circumvent China’s tariffs. Since then, authorities in Hanoi have pledged strikes and tougher penalties, with the aim of protecting exporters.
Outlook on the future
Under a second Trump administration, scrutiny of origin claims is likely to tighten, and penalties can be as high as up to 40 percent when transshipment is proven. So, using diplomacy to make deals might be a way to buy time.
The newly approved $1.5 billion project in Nam Dương, Hưng Yên, Vietnam is a Trump-branded mixed-use tourism and residential complex with golf courses, a resort, and villas near Hanoi. It signals ongoing goodwill and keeps channels open even as trade frictions persist. It may ease the temperature, but it does not change the real test: show substantial transformation and document real local value added.
Conclusion
Rerouting is part of the story, however much of the Vietnam–U.S. trade reflects also real manufacturing. With stricter checks on the way, the only safe play is to build genuine production in Vietnam and keep solid proof of value added. Diplomacy can lower the temperature, but it will not replace compliance at the border. If firms invest and Hanoi enforces, trade can keep moving even when politics heat up.
