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Agriculture exports under impacts of US, EU tariffs
US and EU tariff barriers create significant challenges for Vietnamese agricultural products, but there are also opportunities for businesses that are ready to adapt promptly.
As a country where agriculture accounts for the largest proportion (73.3 per cent) of the economy, agricultural exports are one of Vietnam’s top development goals. The US, with an agricultural export market share of 21.7 per cent and Europe with 11.3 per cent in 2024, continue to be Vietnam’s largest and most important agro-export market.
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| Tran Tuan Minh, director, Vietnam-ASEAN Trade and Investment Promotion Centre |
Tariff barriers are often expressed in three main forms: high import taxes, tariff quotas, and preferential tariffs, and tax rate discrimination.
For Vietnamese agricultural products, the current US tariff schedule applies different tax rates for each type of agricultural product. Coffee is currently not subject to import tax because the US has to import raw coffee from many countries, cashew nuts enjoy a most-favoured-nation tax rate of zero, fresh fruits and vegetables such as mango, dragon fruit, and rambutan have tax rates from 5-15 per cent, while honey is subject to anti-dumping tax of 58-61 per cent.
However, Vietnam does not have any agro-products subject to self-defence tax by the US government.
The EU tariff system for agricultural products imported from Vietnam has undergone important changes since the EU-Vietnam Free Trade Agreement (EVFTA) took effect in 2020. However, to enjoy tariff incentives, Vietnamese agricultural products exported must meet the rules of origin as prescribed by the EVFTA, strict food safety and quarantine standards set by the EU, and a number of other regulations.
As an industry with lower profit margins than some other industries and efficiency based largely on output, trade policy affects the long-term and sustainable development of Vietnamese agricultural exporters. Low export value leads to a corresponding decrease in input material purchase prices, directly affecting farmers, producers, and the domestic agricultural sector.
However, US tariff barriers also have many positive effects on Vietnam’s exports. With many strict import standards with regulations on plant quarantine, food safety and traceability, Vietnamese enterprises have to improve product quality through improving production, while applying modern technology and international standards. When the quality meets such standards, agricultural products can also penetrate markets such as the EU, Japan, and Canada.
Tariffs will create incentives for investment in the agricultural sector. Enterprises and farmers are encouraged to invest in processing technology, post-harvest preservation, and sustainable farming to meet export standards. International investors are also more interested in Vietnam’s agriculture, and international investment contributes greatly to the modernisation of the industry and the improvement of competitiveness.
The US requirements for Vietnamese agricultural products force enterprises to build transparent supply chains, and thereby move towards forming sustainable supply chains.
Finally, tariff barriers will create incentives for trade preferential negotiations. Although there is no FTA with the US, meeting high standards can create a premise for future tariff reduction negotiations.
The positive impacts of the EU tariff system on Vietnam’s agricultural exports are most clearly demonstrated by the benefits that the EVFTA brings. Firstly, it significantly reduces import tariffs on Vietnamese agricultural products, helping enterprises reduce export costs, increase competitiveness, and create a great advantage compared to competitors that do not have an FTA with the EU. In the context of the EU’s high demand for clean food, Vietnamese enterprises will have many opportunities to expand their export markets to the EU.
The deal also encourages investment in the agricultural sector because when tariffs are reduced, enterprises have the opportunity to increase profits and add capital to invest in technological innovation and improve product quality. In addition, many EU enterprises are also interested in and investing in Vietnam’s agricultural sector to take advantage of EVFTA incentives.
The EU tariff system also brings many challenges. Competition between countries that benefit from low tax policies when exporting agricultural products to the EU will still exist. Strict and stringent requirements on rules of origin, technical barriers and quality standards increase production costs and export times.
Vietnamese businesses may also be affected when the EU applies trade defence measures, such as anti-dumping or anti-subsidy duties on Vietnamese products, or the EU may apply tariff quotas if there is a sudden increase in import volume.
To achieve its set goals, Vietnam needs to have solutions to encourage export efficiency. The government needs to boost trade negotiations to reduce import taxes, as well as sign bilateral trade agreements that are beneficial to export goals.
In addition, the government must move to harmonise the trade balance between Vietnam and the US as well as the EU to reduce the risks of tariffs occurring when the trade balance is too unequal. For businesses, diversifying export markets by expanding old markets as well as finding new markets are significant goals. Businesses must also focus on developing added value for Vietnamese agricultural products, especially shifting from raw exports to deep processing, to increase product value and reduce the impact of tariffs.
The Ho Chi Minh City Real Estate Association (HoREA) has proposed a pilot mechanism that would allow businesses to invest in and construct worker housing within industrial parks.
In a document submitted to the Prime Minister, contributing feedback on a draft pilot policy aimed at boosting social housing development, HoREA suggested that businesses, cooperatives, and cooperative unions operating within industrial parks be permitted to build accommodation for their workers. It also called for allowing companies to rent housing outside industrial parks for the same purpose.
HoREA emphasized that all costs related to building or renting worker housing should be recognized as legitimate business expenses and be included in the enterprise’s operating costs.
The association further recommended expanding the policy framework to allow companies within industrial parks to lease social housing or worker accommodation built by third-party developers outside the park premises.
According to Mr. Lê Hoàng Châu, Chairman of HoREA, the current Housing Law (2023) only allows companies to rent worker housing inside industrial parks, without clearly defining whether they can rent social housing outside the parks or construct such housing themselves.
With worker housing demand at industrial parks far exceeding supply, HoREA pointed out that current social housing and dormitory offerings are inadequate. Meanwhile, commercial housing remains out of reach for most workers due to high prices. Therefore, the association urges the government to introduce policies enabling manufacturing businesses—despite not operating in real estate—to develop their own accommodation solutions for employees.
HoREA underscored that such policies would create a strong legal foundation, empowering enterprises and cooperatives to proactively resolve housing issues for workers. If allowed to construct their own housing, companies could ensure homes go to those in need, boosting employee retention, improving living standards, and supporting sustainable growth in industrial zones.
The association also proposed financial support mechanisms, including tax incentives, access to preferential loans, or government-matching support, to reduce the financial burden on companies participating in worker housing development.
Previously, many businesses had expressed a desire to buy land, build housing, and offer installment-based homeownership plans to workers, whereby employees would pay monthly through salary deductions. While this model helps workers secure long-term housing, legal procedures remain a major hurdle.
Providing accommodation has increasingly become part of corporate strategies to retain labor, alongside other employee welfare policies. For example, Nissei Electric Vietnam (Linh Trung 1 Export Processing Zone, Thu Duc City) has built a dormitory complex with 285 shared rooms, housing up to 2,280 workers. Eternal Prowess Vietnam (District 12) and Thien Phat Company (Linh Trung 2 EPZ) have also invested in on-site worker housing. Thien Phat’s project includes 368 units (35m² each), rented at VND 2.2 million/month, with 80% of the units for families and 20% for shared accommodations.
As of Q2 2024, Ho Chi Minh City has 18 industrial parks with around 1,700 businesses employing approximately 320,000 workers. Citywide, over 1.3 million people are employed in factories. However, there are only 16 official worker housing complexes, accommodating about 22,000 people. The majority of workers rely on rented rooms or stay with acquaintances—often sharing 12m² rooms among 2–3 people, which consumes 15–20% of their monthly income.
From 2021 to the present, Ho Chi Minh City has completed six social housing projects with 2,700 units and is building four more with 3,000 units. By April 30, the city aims to resolve legal hurdles and break ground on 5–6 additional social housing projects, totaling around 8,000 units.
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According to Statista Market Insights, the Vietnamese semiconductor market is forecast to see healthy growth with a compound annual growth rate of 9.62 per cent between 2024 and 2027, reaching a market volume of $26.20 billion.
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| Le Quan, Senior lecturer Faculty of Engineering Fulbright University Vietnam |
Vietnam also boasts over 30 foreign-led companies in integrated circuit (IC) design, including established players like Renesas, Synopsys, and Cadence alongside innovative startups like Ampere, ADTechnology, Inphi, FingerVina, Dolphin Technology. The sector also encompasses numerous smaller firms with around 100 or fewer employees.
By 2040, Vietnam is poised to become a crucial player in the global semiconductor ecosystem, encompassing all aspects of the industry, from design and manufacturing to assembly, test, and packaging (ATP) and equipment fabrication.
The strategy emphasises the importance of fostering a skilled workforce. Vietnam boasts a strong talent pool in the semiconductor industry, with 50,000 design engineers, 200,000 electronics engineers, 500,000 technical workers, and one million software engineers. To further enhance this workforce, the strategy aims to transition up to 30,000 personnel from the existing pool of 350,000 IT and telecommunications engineers.
The global semiconductor packaging landscape is undergoing a rapid transformation, driven by a surge in new facilities across Asia. The wave of semiconductor investment in Vietnam and the industry’s demand for personnel have driven educational institutions, from top universities to vocational colleges, to launch training programmes related to semiconductors.
Last year, major universities such as Hanoi University of Science and Technology, University of IT – Vietnam National University Ho Chi Minh, and the University of Engineering and Technology announced engineering programmes specialising in semiconductors. Younger universities like FPT and Phenikaa are also making significant investments in this area, not only in training initiatives but also in facilities and equipment.
However, to truly understand the current landscape of semiconductor training in Vietnam, it is essential to look at the regulations and current state of training schemes in this field from 2024 backward.
Firstly, the high costs associated with establishing chip fabrication facilities make it an impractical investment for Vietnam. The country’s resources would be better allocated towards sectors that promise more immediate returns, such as ATP and IC design. Advanced packaging technologies represent a feasible and profitable entry point in the global semiconductor value chain, aligning with Vietnam’s strengths in low-cost, adaptable labour.
Vietnam should focus on drawing overseas funding into ATP operations, leveraging its lower labour costs to attract foreign companies. The availability of a high-quality but affordable workforce makes Vietnam an attractive destination for packaging, testing, and assembly processes. Prioritising such investment with advanced packaging capabilities will allow Vietnam to build a competitive advantage in this sector.
Meanwhile, the IC design segment represents a high-value opportunity with significant global demand. To capitalise on this, Vietnam should proactively seek partnerships and outsourced projects from international IC design firms. Engaging Vietnamese firms in IC design outsourcing allows for skill transfer, builds local capacity, and positions Vietnam as a reliable partner in the global semiconductor value chain.
Collaboration between industry, educators, and government should be boosted. Building a cohesive semiconductor workforce will require closer partnerships between educational institutions, industry players, and the government.
By integrating real-world projects into academic programmes, Vietnamese graduates will better understand the industry’s practical requirements and be more prepared to transition directly into the workforce. Schemes that bring industry projects to academia will provide students with hands-on experience, making them job-ready upon graduation.
At the same time, establishing specialised training for semiconductor roles, particularly in ATP and IC design, will be essential to reduce the industry’s current reliance on costly in-house training. This should involve upskilling engineers from related fields through short, intensive courses designed to meet industry standards.
Partnerships with international organisations for curriculum development, as well as accreditation for training initiatives, will help elevate Vietnam’s semiconductor workforce to global standards.
Vietnam can also implement “train-the-trainer” programmes. Its academic institutions face a shortage of faculty members with practical experience in semiconductor technologies. By leveraging international partnerships, Vietnam can upskill its instructors, who can then transfer these skills to future generations of engineers.
Notably, several US institutions have expressed willingness to offer training to Vietnamese trainers, a vital step towards creating a sustainable, locally driven semiconductor education ecosystem.
Finally, effective workforce development in the semiconductor industry requires government involvement in fostering a supportive ecosystem. Policies that incentivise partnerships between academia and industry, such as funding for research and development and joint training programmes, are critical.
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