Vietnam and Thailand Face Risks of U.S. Reciprocal Tariffs Due to Trade Surplus

Trump's decision to impose reciprocal tariffs could target Southeast Asian nations with significant U.S. trade surpluses / AFP

President Donald Trump signed an executive order authorizing the imposition of reciprocal tariffs on countries that charge higher import duties on American goods. This move could have a major impact on countries like Vietnam and Thailand, which have seen substantial trade surpluses with the U.S. in recent years. Both nations benefitted from the trade diversion caused by the U.S.-China trade war, but now find themselves at risk of facing U.S. tariffs as the Trump administration turns its focus toward addressing trade imbalances.

During Trump's first term, the trade war with China prompted many global companies to shift their manufacturing operations away from China, leading to an influx of foreign businesses into Southeast Asia. This so-called “China plus one” strategy greatly benefited countries like Vietnam and Thailand, where the trade surpluses with the U.S. expanded significantly. In fact, by 2023, the ASEAN region's trade surplus with the U.S. had reached an all-time high of approximately $200 billion.

For instance, Thailand’s trade surplus with the U.S. skyrocketed by 343% since Trump’s first term began in 2017. Vietnam, too, experienced a 222% increase in its trade surplus with the U.S. In 2024, Vietnam recorded a trade surplus of $123.5 billion, marking a record high and making it the fourth-largest trade partner with the U.S., after China, the European Union, and Mexico. This trade surplus is a direct result of the “de-Chinaization” of global supply chains, which pushed many companies to shift their sourcing to Vietnam and other Southeast Asian nations.

With this growing surplus, Vietnam, in particular, is now facing the risk of becoming a primary target of Trump’s reciprocal tariffs. The U.S. Trade Department reports that Vietnam’s 2024 trade surplus with the U.S. was up by 18.1% compared to the previous year, ranking it among the largest trade surpluses globally. As a result, the possibility that Vietnam could become a target of U.S. tariffs is increasing, and the country has already expressed plans to reduce its trade surplus by importing more U.S. goods, such as energy and agricultural products.

In response to this looming threat, Thailand has also begun to take action to reduce its trade surplus with the U.S. In early February 2025, Thai Prime Minister Prayut Chan-o-cha directed the government to study the potential impacts of U.S. trade policies on Thai exports. To mitigate the potential for U.S. tariffs, Thailand is looking to increase imports of U.S. products, including ethanol and animal feed, and has called on local businesses in the petrochemical industry to boost imports of U.S. ethanol by at least one million tons.

The Trump administration’s move to impose reciprocal tariffs on countries with large trade surpluses with the U.S. is seen as an effort to reduce the trade deficit and create a more equitable trading environment. However, this could lead to significant economic challenges for emerging Asian economies like Vietnam and Thailand. These countries have benefited from trade flows as companies sought to reduce their exposure to China amid the U.S.-China trade war. However, the possibility of reciprocal tariffs could create a difficult situation for both countries, pushing them into a ‘lose-lose’ scenario where they could face rising costs and economic uncertainty.

As the global trade landscape continues to evolve, the potential implementation of reciprocal tariffs represents a serious challenge for countries like Vietnam and Thailand, which must now navigate these new trade dynamics. Both nations are expected to take proactive measures to address the situation and seek solutions that will enable them to maintain strong economic ties with the U.S. while mitigating the risks of being caught in the crossfire of a global tariff war.