In an increasingly interconnected world, diplomatic relations and trade agreements are taking center stage, particularly as tensions rise between the United States and countries like China and Vietnam. China's President Xi Jinping, alongside European Union leaders, is scheduled to visit Vietnam in the coming weeks, with significant implications for trade and international relations.
According to reports, Xi is expected to meet with Vietnamese leaders in Hanoi on April 14, 2025, marking his second visit to the country within a year and a half. This multi-day visit is part of a broader trip that includes stops in Cambodia and Malaysia, highlighting the strategic importance of Southeast Asia in global trade dynamics.
Vietnam's foreign affairs ministry has remained tight-lipped about the visit, yet two Vietnamese officials with direct knowledge of the plans confirmed the details to Reuters. Discussions during Xi's visit are anticipated to focus on several key issues, including the development of railways linking northern Vietnam with China, which both nations have agreed to enhance to bolster trade connections.
In addition to Xi's visit, Spain's Prime Minister Pedro Sanchez will meet with Vietnamese leaders on April 9, followed by EU trade commissioner Maros Sefcovic. French President Emmanuel Macron and European Commission President Ursula von der Leyen are also set to visit Hanoi shortly thereafter, indicating a flurry of diplomatic activity aimed at strengthening ties with Vietnam.
Von der Leyen recently emphasized the need for new opportunities to trade and invest with trusted partners, particularly as the tide of tariffs and export controls rises. "We want to create new opportunities to trade and invest with trusted partners," she stated during a video message to ASEAN officials gathered in Hanoi last month.
As these diplomatic efforts unfold, Vietnam is simultaneously preparing for its own delegation to the United States. Vietnam's Deputy Prime Minister Ho Duc Phoc, along with executives from major airlines such as Vietnam Airlines and Vietjet Aviation, will visit the U.S. this weekend, around April 5-6, 2025. Their agenda includes meetings with Boeing and several U.S. banks, as the Vietnamese government seeks to address its significant trade surplus with the U.S., which exceeded $123 billion last year.
Vietnam's efforts to mitigate trade tensions with the U.S. come at a crucial time, especially as the Trump administration's looming tariffs threaten to impact U.S. sportswear brands heavily reliant on Vietnamese manufacturing. Companies like Nike and Adidas, which produce a substantial portion of their footwear and apparel in Vietnam, are bracing for the potential fallout from these tariffs.
Nike, for instance, manufactures half of its footwear and nearly a third of its apparel in Vietnam, making it particularly vulnerable to the new trade measures set to launch on April 2, 2025. Adidas, too, has significant exposure, with 39% of its footwear and 18% of its apparel produced in the country. As the tariffs approach, both companies face difficult decisions regarding pricing and cost management, which could have lasting implications for their bottom lines.
Smaller brands, including Puma and On, are not exempt from the pressures of these tariffs either. Puma's shares have already taken a hit, slumping 23% this year following weak profit guidance. The added strain from tariffs could exacerbate their challenges, particularly for newer brands like On, which is still in the process of scaling its operations.
In an effort to navigate these turbulent waters, Vietnam has taken steps to strengthen its trade relations with the U.S. The country has cut tariffs on certain American products and has allowed Elon Musk's SpaceX to trial its Starlink satellite internet service in Vietnam. Such measures are intended to smooth over trade relations and demonstrate Vietnam's commitment to fostering a positive business environment.
The stakes are high for both Vietnam and the U.S., as exports to the U.S. account for nearly 30% of Vietnam's GDP. With the looming tariffs, the retail sector is already sounding alarms, warning that U.S. consumers may ultimately bear the brunt of increased prices. H&M's CEO has raised concerns that the added costs from tariffs could lead to higher prices for consumers, putting additional pressure on brands already grappling with declining sales.
As the April 2 tariff date approaches, companies like Nike and Adidas must act swiftly to assess the potential impact on their operations and pricing strategies. Investors are closely monitoring the situation, with analysts particularly bullish on On's stock, which has received a Strong Buy rating, suggesting significant upside potential as the company navigates these challenges.
In summary, the upcoming visits by Xi Jinping and EU leaders to Vietnam, coupled with Vietnam's delegation to the U.S., underscore the complex interplay of diplomacy and trade in today's global economy. As countries strive to strengthen their economic ties and mitigate the risks posed by tariffs, the outcomes of these diplomatic engagements will likely shape the future of international trade in the region.
