In a surprising turn of events, President Donald Trump suggested on May 9, 2025, that the United States might lower tariffs on Chinese goods significantly. This announcement came just before crucial trade negotiations between the two economic giants scheduled for the upcoming weekend. Trump took to the Truth Social platform to propose an 80% tariff on Chinese imports, stating, "The 80% tariff on China seems appropriate! [The decision] depends on Scott B!" This comment points to Treasury Secretary Scott Bessent, who is expected to engage in discussions with Chinese officials in Switzerland.
Currently, the U.S. imposes a staggering 145% tariff on many Chinese goods, making Trump’s suggestion a notable reduction. However, it remains a high figure for trade between two of the world’s largest economies, particularly when compared to the recent 10% tariff agreement between the U.S. and the U.K. The ambiguity surrounding whether Trump envisions the 80% tariff as a long-term strategy or a negotiation tactic remains. According to CNBC, China is perceived as a significant obstacle in Trump’s efforts to reshape global trade systems.
Earlier in April, while Trump delayed imposing higher tariffs on nearly 60 trade partners, tensions with China escalated, culminating in Beijing imposing a 125% tariff on U.S. goods. The trade relationship between the two nations is crucial, with the U.S. exporting $143.5 billion in goods to China and importing $438.9 billion in 2024. In a follow-up post on Truth Social, Trump urged, "China should open its markets to the U.S. This will be good for them! Closed markets are no longer effective!"
As the dust settles on the recent annual shareholder meetings and first-quarter earnings reports, investors are left contemplating their strategies amidst ongoing tariff risks. Le Duc Tien, an analyst at Shinhan Vietnam Securities, advised investors to consider taking profits and closely monitoring tariff policy developments rather than solely focusing on company-specific information. This caution comes as the financial sector reported a robust growth of 14.1% in Q1 2025, outpacing the overall market growth of 11.8%.
The retail sector also shone brightly, achieving an impressive 74% growth compared to the same period last year. With expectations running high for a potential upgrade of Vietnam's stock market in September, many are keenly watching how these developments unfold.
In the first four months of the year, foreign direct investment (FDI) capital surged, bolstered by global companies like Apple looking to diversify their production bases. Apple is reportedly shifting its manufacturing operations to India and Vietnam, a move that, if trends continue, could position Vietnam as a prime alternative for companies looking to move away from China due to geopolitical tensions.
While the financial sector has shown resilience, other sectors have experienced a mixed bag of results. The banking sector, for instance, displayed a clear divide between private banks and the Big Four, with private institutions generally performing better thanks to stable net interest margins and sustainable credit growth. In contrast, some of the larger banks faced challenges, including rising non-performing loans and increased operational costs.
Despite these challenges, the overall non-performing loan ratio remains stable, reflecting the cyclical nature of the banking industry. However, concerns loom as the ratio of bad loans, particularly in categories three to five, has increased compared to Q4 2024.
In the real estate sector, the outlook appears to be improving, thanks to new laws governing real estate business, land, and housing. These legal frameworks have begun to positively influence market conditions, with companies launching new projects seeing favorable results.
Moreover, the industrial real estate sector has benefited from a significant influx of FDI in the early months of 2025, coupled with a slight increase in industrial land prices. Yet, only those companies with substantial land reserves are likely to see clear growth, while those with limited land holdings may struggle.
In light of the ongoing geopolitical tensions, particularly between India and Pakistan, Tien highlighted that this situation presents a unique opportunity for Vietnam. Global firms are increasingly hesitant to invest in regions with high geopolitical risks, potentially favoring Vietnam as a safer investment destination.
As the market braces for potential changes, Tien has identified sectors that are less affected by the trade war, such as domestic consumption, logistics—especially large port clusters—and essential services like utilities. The banking sector also has promising growth expectations, with projections suggesting increases of 30-40% in certain areas.
Conversely, industries heavily reliant on exports to the U.S., like textiles and seafood, may find themselves facing significant challenges. This dichotomy in sector performance underscores the need for investors to adopt a nuanced approach, particularly as they navigate the complexities of the current economic landscape.
As the old adage goes, "Sell in May and go away," often rings true in the market. This phenomenon typically occurs after companies report their first-quarter earnings, leaving investors in a lull of information until the next reporting season. Tien emphasized that current investors should remain vigilant regarding tariff implications, as even a single tweet from President Trump can sway market sentiments significantly.
In this climate of uncertainty, those who have achieved reasonable profits may want to consider cashing out while keeping a close watch on evolving tariff policies. The landscape remains fluid, with potential shifts that could impact investment strategies across various sectors.
