Teflon Vietnam. This banner normally refers to the nation\u2019s thriving trade in polymerizing\u00a0tetrafluoroethylene resins used in everything from autos to cooking utensils. These days, it describes an economy to which nothing sticks, least of all US tariffs.<\/p>\n
In the third quarter, as US President Donald Trump slapped a 20% levy on Vietnam, the economy grew<\/a> a China-beating 8.22% year on year. That marked an acceleration from the 7.96% pace in the April-June period.<\/p>\n Being Asia\u2019s fastest-growing economy doesn\u2019t come without peril, of course. Particularly if the sight of US tariffs literally rolling off the back of Prime Minister\u00a0Pham Minh Chinh\u2019s economy triggers Trump.<\/p>\n This isn\u2019t the first time Vietnam managed to skate around Trump\u2019s mercantilism. By the end of Trump\u2019s first term, from 2017 to 2021, he was miffed to learn that the jobs his policies sought to pry away from China<\/a> had migrated to Vietnam, not the US.<\/p>\n Like a proper schoolyard bully, Trump 1.0, on the way out the door, couldn\u2019t resist poking developing Asia one last time. Trump\u2019s Treasury Department branded\u00a0Vietnam<\/a> a \u201ccurrency manipulator,\u201d while giving China a pass.<\/p>\n It smacked of retribution for Hanoi\u2019s victory in the Trump 1.0 trade war. All his swipes at China did was drive production from President Xi Jinping\u2019s economy to Chinh\u2019s. The factories Trump thought would return to Ohio and Michigan instead moved to Ho Chi Minh City.<\/p>\n Part of Vietnam\u2019s appeal to global manufacturing giants is the \u201cmini-China\u201d vibe officials in Hanoi have long been happy to exploit. Its smokestack-heavy economy<\/a>, communist politics, growing population, low labor and land costs, 7%-plus annual growth rates over the last 10 years and physical proximity give Vietnam a familiarity halo.<\/p>\n The dynamic gave\u00a0Vietnam\u00a0a significant competitive advantage in Southeast Asia as the Trump 2.0 era arrived, marked by outsized tariffs and general chaos. That, and Hanoi reported green-lighting a\u00a0US$1.5 billion golf resort<\/a> in Hung Yen province for the Trump family.<\/p>\n Even so, Vietnam\u2019s glaring success could make it a big target. As Finance Minister Nguyen Van Thang notes, Vietnam just posted \u201cthe highest quarterly growth since 2011, excluding the surge in 2022 due to recovery post Covid-19 pandemic.\u201d<\/p>\n In the first nine months of 2025, Vietnam\u2019s total trade turnover, which includes imports and exports, topped $680 billion, up 17% from a year earlier. That equates to a trade surplus of $16.8 billion during the same period.<\/p>\n This data arrives a month after Chinh predicted exports would be up more than 12% for all of 2025. That\u2019s not to say Vietnam is out of Trumpian harm\u2019s way. In a recent report, the United Nations Development Programme<\/a> warned that US levies could erase one-fifth of Vietnam\u2019s shipments to the US.<\/p>\n Yet if history is any guide, investors might be wise to avoid betting against Vietnam\u2019s economy. Fitch Ratings analyst Tamma Febrian expects Vietnam\u2019s \u201cresilient economic growth\u201d to continue, helping to buttress the nation\u2019s financial system.<\/p>\n \u201cThis has buoyed banking business volume, with system credit rising by 19% year on year,\u201d Febrian says. \u201cThe government\u2019s pro-growth policies together with sustained exports and foreign direct investment should maintain the supportive economic environment, underpinning banks\u2019 asset quality.\u201d<\/p>\n It\u2019s not just \u201cold economy\u201d engines that are driving Vietnamese growth. As Adam Slater at Oxford Economics notes, \u201cthe AI boom<\/a> is a key factor supporting trade growth among the Asian economies,\u201d and Vietnam is among the main places in the region where \u201cthe benefits of the boom are centered.\u201d<\/p>\n A recent study from Lazada\u2013Kantar found that 42% of Vietnam\u2019s online sellers are already using AI tools, and that AI could boost local productivity in ways Vietnam\u2019s top-down, control-obsessed government can\u2019t.<\/p>\n Yet it\u2019s Vietnam\u2019s success in avoiding Trump 2.0\u2019s tactics that really made the difference in 2025. This included shrugging off the White House\u2019s headlong assault on so-called \u201ctransshipments.\u201d<\/p>\n Ironically, the Trump 1.0 period catalyzed\u00a0China Inc.<\/a> not just to sandbag the export sector but also to increase competitiveness in ways that the Trump 2.0 gang hadn\u2019t noticed, notes Arthur Kroeber, economist at Gavekal Dragonomics.<\/p>\n Chinese exporters, he notes, \u201cstill have plenty of workarounds through\u00a0transshipment\u00a0and relocating late-stage production to lower-tariff countries.\u201d<\/p>\n These\u00a0transshipments, of course, put a bullseye on Southeast Asian economies, which Trump pledged to punish for engaging in large-scale arbitrage by passing goods through lower-tariff countries to avoid US levies.<\/p>\n Ironically, says Jackson Lopez, an analyst at the Lowy Institute, \u201cthe transshipment tariff might help Beijing. Pending\u00a0ongoing trade negotiations<\/a>, tariffs on China will stay below the rate for transshipments. This means that US importers may find it cheaper to buy directly from China, rather than risk high premiums on Vietnamese goods.\u201d<\/p>\n If the Trump administration applies an overly broad definition of transshipment and rushes enforcement, it follows, \u201cBeijing would likely outcompete its competitors for US imports,\u201d Lopez notes. \u201cThis would undo years of\u00a0Vietnamese gains in the US market<\/a>, which has reduced reliance on China.\u201d<\/p>\n As Hanoi\u2019s exports to the US increase, Vietnamese companies are increasingly importing raw materials and components from China. More bilateral trade also correlates with a rise in transshipments routed through Vietnam, which are included in aggregate imports from China.<\/p>\n So how can increases in legitimate imports get disentangled from transshipments? This, Lopez says, is where researchers disagree.<\/p>\n Vietnam is a stark reminder that the blunt tools that might\u2019ve worked in the 1980s have far less utility now. Even China, the central target of Trump\u2019s trade war, is seen brushing off the worst of Trump\u2019s tariffs to meet this year\u2019s 5% growth target. And if Goldman Sachs has it right, that figure might accelerate to 6%<\/a> next year.<\/p>\n Nor is there much in Vietnam\u2019s recent data that gives economists cause for pause. \u201cVietnam\u2019s October data dump captured easing inflation and slowing growth across industrial production, retail sales, exports and imports,\u201d notes Sunny Kim Nguyen, economist at Moody\u2019s Analytics.<\/p>\n That, Nguyen notes, included industrial production rising 10.8% year on year, after climbing 12.7% in September, and nominal goods exports rising 17.2% after climbing 24.7% in September. Imports are rising, too, up 16.8% in October after a 24.9% jump in September.<\/p>\n That all suggests that Vietnamese household confidence is in decent shape. Retail sales rose 7.2% in October year on year. Nor is inflation out of control, with consumer prices rising at a 3.3% rate, not far from the US and Japan.<\/p>\n So far,\u00a0China\u00a0has\u00a0had\u00a0a\u00a0much\u00a0better-than-feared\u00a0experience\u00a0with the Trump 2.0 presidency<\/a>. Xi\u2019s Communist Party isn\u2019t enjoying the 47% tariff Trump imposed. But China is winning the soft power war as Trump\u00a0roils global markets, torches democratic alliances and trashes the esteem America spent decades amassing in 10 short months.<\/p>\n Watching\u00a0Trump\u2019s\u00a0benefactor, Elon Musk, throw sand in the gears of US institutions and have his way with sensitive data \u2014 including the Treasury Department \u2014 to mysterious ends undermined trust at home and abroad, undermining the sanctity of US government debt.<\/p>\n Trump\u00a0also blinked on his big trade war. Team Xi recently scored a one-year truce after several previous delays. It means that a US-China deal, \u201cgrand\u201d or not, won\u2019t materialize until early 2027, at best.<\/p>\n