Vietnam has surpassed Japan to become China’s third-largest export market for the first time, as companies seek to bypass U.S. tariffs while continuing to rely on Chinese manufacturers for essential components. According to data released by China’s Customs Administration on Monday, Chinese exports to Vietnam surged by nearly 18% in 2024, reaching a record $162 billion—outpacing Japan’s $152 billion.
This dramatic increase is largely attributed to the growth in exports of parts to Vietnam, where they are assembled and then shipped to the U.S. and other global markets. Electronics components, such as screen modules and computer memory, comprised eight of the ten fastest-growing export categories, according to data covering the year through November 2024.
While the rerouting of trade could lead to higher costs for businesses and consumers, it has significantly benefited Vietnam, which has seen a rise in foreign investment as companies look to diversify their supply chains away from China. Major electronics manufacturers, including Samsung Electronics, Luxshare Precision Industry, and Hon Hai Precision Industry, have invested billions of dollars in the Southeast Asian nation to assemble high-demand products like AirPods and MacBooks.
Vietnam’s rapid growth in exports can be attributed to companies seeking to mitigate the risk of future tariffs, said Nguyen Mai, chairman of the Vietnam Association of Foreign Invested Enterprises. “We’ve seen more and more companies moving from China to Vietnam to avoid future tariff risks,” Mai explained, adding that this shift has likely driven the surge in exports.
The growing demand for artificial intelligence (AI) products and U.S. export restrictions on AI chips has also contributed to increased investment in Vietnam. For example, Hon Hai began producing Nvidia’s AI graphics cards at its Vietnamese subsidiary last year, with key components like integrated circuits and printed circuit boards sourced from China. The bulk of these finished products were exported to American customers, which contributed to a record trade surplus for Vietnam with the U.S. in the year through November.
However, this shift in trade dynamics could bring new challenges for Vietnam. The country may find itself under increased scrutiny from U.S. policymakers, including President-elect Donald Trump, who has expressed concerns over trade imbalances with Vietnam. In 2019, Trump labeled Vietnam a trade “abuser” and suggested that trade between the two nations needed to be better balanced.
In response to these changes, the Biden administration has already imposed tariffs on solar panels made in Vietnam and three other Southeast Asian countries, as many of these panels were produced by Chinese companies seeking to bypass U.S. tariffs.
Mai anticipates that the new U.S. administration’s trade policies could bring further challenges. “From what Trump has said before and with his ‘America First’ policy, we may see higher tariffs and other trade barriers this year,” he remarked. “However, we also believe that both the Trump and Biden administrations will recognize the importance of Vietnam in their foreign policy and the mutual benefits that could arise from stronger trade relations between the two markets.”
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