Stocks rose on Wall Street on Wednesday, May 7, 2025, as China steps up measures to shore up its economy and gears up for trade talks with the United States. The S&P 500 index rose 0.4 percent in morning trading, while the Dow Jones Industrial Average climbed 242 points, or 0.6 percent, as of 9:59 AM Eastern. The Nasdaq composite also saw an increase of 0.3 percent.
Walt Disney led the charge with a remarkable surge of 9.9 percent in its stock price after it easily beat analysts’ profit targets, raised its profit forecast, and added more than a million streaming subscribers. This encouraging update from Disney arrives amid broader concerns that tariffs might sap consumer spending and adversely affect a wide range of companies, particularly those focusing on discretionary items such as entertainment and travel.
The backdrop of these stock market gains comes amid a complicated economic landscape, where technology companies are facing particularly challenging circumstances due to the ongoing trade war between the US and China. Currently, US tariffs against China stand at a staggering 145 percent, while China has imposed tariffs of 125 percent on US goods.
Meanwhile, the textile and garment industry, a cornerstone of Vietnam’s export-driven economy, is grappling with significant challenges due to proposed US tariffs that could dramatically increase export costs. In 2024, Vietnam’s textile sector generated over US$44 billion in export revenue, with the US accounting for 40 percent of that total. This success has been largely attributed to Vietnam’s competitive labor costs, improving infrastructure, and access to a vast network of free trade agreements (FTAs).
However, the country’s reliance on the US market has made it increasingly vulnerable to geopolitical shifts and trade disputes. The proposed 46 percent reciprocal tariff on textile and garment exports to the US could mean that average duties on Vietnamese textile products might jump to around 61 to 62 percent from the current 15 to 16 percent. Such an increase would spell disaster for many Vietnamese manufacturers, who typically operate with thin margins of about 5 percent and could lead to higher retail prices for American consumers already grappling with inflation.
In the short term, many Vietnamese textile producers have ramped up production and shipping to meet US orders before a July deadline. However, this urgency has led to canceled orders, job freezes, and workforce reductions, indicating that American buyers are already scaling back in anticipation of higher costs. In the first quarter of 2025, Vietnam’s exports to the US were valued at US$31.4 billion, reflecting a 22 percent year-on-year increase, while imports grew almost at the same rate to US$4.1 billion due to the impact of US tariffs on textiles and other sectors.
The situation is further complicated by the fact that the US remains the largest export destination for Vietnam, accounting for 30 percent of its total exports. Notably, some product categories, such as jackets, already face tariffs of up to 27 percent, and the proposed increase could make Vietnamese products uncompetitive compared to alternatives from Bangladesh, India, or Central America.
Vietnam’s production model is heavily dependent on imported raw materials, particularly cotton and yarn from China and India. With US tariffs extending to these countries, the cost of imported inputs will rise, further inflating production costs for Vietnamese manufacturers and adding pressure on supply chains. Currently, China accounts for 38 percent of Vietnam’s imports.
In response to these mounting trade pressures, Vietnam is adopting a multifaceted strategy to reduce its vulnerability and reposition its textile and garment industry for long-term sustainability. Prime Minister Pham Minh Chinh has emphasized the urgency of industrial upgrading, market diversification, and deeper international integration as essential pillars of a more resilient growth model.
The government is encouraging firms to explore new export markets through existing FTAs, such as the EU-Vietnam Free Trade Agreement (EVFTA), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the Regional Comprehensive Economic Partnership (RCEP). By boosting exports to the 17 countries with which it has preferential trade arrangements, Vietnam can soften the impact of US tariffs while maintaining access to major global consumer markets.
Additionally, the government is pushing domestic firms to transition from low-cost outsourced manufacturing toward Original Design Manufacturing (ODM) and Original Brand Manufacturing (OBM). This shift would enable Vietnamese enterprises to capture greater value, build brand recognition, and reduce exposure to external trade shocks such as tariff fluctuations.
To support businesses and workers affected by shifting trade dynamics, the Vietnamese government is preparing targeted support measures while advancing structural reforms. The country is aiming for GDP growth of at least 8 percent in 2025 and a total GDP exceeding US$500 billion, which would place Vietnam among the world’s top 30 economies.
Strategic infrastructure investments are also on the agenda, with a flagship initiative being the development of a multi-billion-dollar railway linking Hai Phong port—home to 241 Chinese investment projects worth US$6 billion—with China. This project aims to enhance regional trade integration and logistics efficiency, directly supporting the textile industry’s export competitiveness.
Moreover, a strong push toward technological innovation and digital transformation within the textile sector is being promoted. The adoption of automation, smart manufacturing systems, and data-driven supply chains is helping firms lower costs, improve productivity, and comply with stricter international standards on sustainability and traceability.
Despite the ongoing tensions, broader geopolitical shifts may offer Vietnam new opportunities. As the US recalibrates its trade policy toward China, many American buyers are likely to seek alternative sourcing destinations. Vietnam, with its reliable production base and increasingly sophisticated capabilities, stands to benefit from this strategic realignment.
In a significant diplomatic development, PM Chinh announced that Vietnam is one of six countries prioritized by the United States for tariff negotiations. The first round of bilateral talks is scheduled for May 7, 2025, following Washington’s temporary 90-day deferral of proposed reciprocal tariff hikes for key trade partners (excluding China), during which a provisional 10 percent rate has been applied.
As Vietnam accelerates its domestic reforms and deepens international engagement, the upcoming US-Vietnam tariff negotiations will serve as a pivotal moment. The talks are expected to clarify the direction of bilateral trade relations and reveal how Vietnam can leverage current challenges to solidify its position in global supply chains.
