The Silent Winner of the US-China Trade War

Source: Stock Images (USA and China trade war. US of America and Chinese flags crashed containers in the sky at sunset background. 3d illustration)

The United States and China’s economic rivalry is widely analyzed, but what is often missed is a silent beneficiary of this tension. Vietnam has found itself as an important player in the global market as the US-China trade war continues to rage.

Since 2017, China’s business activities have been widely challenged by the US, and China has retaliated through tariffs and other actions, “which have spiraled into a full-blown economic and trade war.” The tariffs imposed in 2018 and 2019 covered $250 billion of Chinese goods and caused declines in US imports, which made the U.S. more open to exports from other countries. Countries like Vietnam, Mexico, Canada, and South Korea saw large increases in exports to the US from 2017 to 2025 relative to China in markets like electronics, clothing, footwear, and furniture.

Vietnam, a country in Southeast Asia, tells a remarkable success story. The country has already been one of the world’s “most open, trade-oriented economies, highly sensitive to global shifts,” but in the period of the US-China trade war, its exports to the US nearly tripled in just 7 years, from 2017 to 2024. How did this happen? Well, it’s simple. When Chinese goods face tariffs, firms leave and invest in countries that can export to the US relatively freely. Tech giants like Dell and Apple have turned to Vietnam for laptop assembly. In addition, “Samsung and Intel have substantially expanded their Vietnamese operations since 2018 – the start of the trade war.”

But why Vietnam out of all countries? A few reasons, such as the geography of the country, US-Vietnamese relations, and the country’s economic background, provide answers to this question. First, Vietnam borders China to the south, making it a go-to destination for firms that choose to move away from China or diversify. It avoids tariffs while maintaining similar geographical logistics. Secondly, Vietnam had already been a manufacturing powerhouse, as well as a trade-oriented country, well before the US-China trade war. Although there are concerns about how much more the manufacturing industry can contribute to growth in the country, it has been one of the key drivers of growth, surpassing China and India. Third, Hanoi maintains a close and transactional relationship with the current US administration. In 2024, the Trump Organization was offered the opportunity to develop a $1.5 billion golf resort in Hung Yen Province. Additionally, Hanoi understands its geopolitical importance to the United States and will demonstrate “goodwill” to avoid American tariffs.

Vietnam looks like a great alternative on paper. It seems to be on the same page with U.S. objectives in terms of economic integration. However, this does not translate into full geopolitical and strategic alignment with the United States. There are risks and implications that Washington should carefully consider if it wants to maintain Vietnam as one of its leading trade partners. Hanoi positions itself in a neutral position in order to remain the key US exporter while not risking “provoking Beijing.” This is partially caused by China’s role in Vietnam’s economy. “China remains Vietnam’s largest import market, providing approximately half of all inputs for Vietnamese manufacturers.” Simply put, Chinese goods still make it into the US through Vietnam, avoiding tariffs.

One of the biggest concerns with Vietnam as an emerging trade partner has been transshipment. “In its simplest form, transshipment refers to moving an item from country A to country C with an intermediate stop in country B. Increasingly, these intermediate stops are not benign.” The Trump administration has requested that Vietnam crack down on “companies that are rerouting goods from China to Vietnam to avoid tariffs.” In response, Vietnam has created a task force that investigates and eliminates smuggling and trade fraud to avoid additional tariffs from the US. In 2025, the US and Vietnam have entered a trade framework agreement under which Vietnam has[HO4]  agreed to remove tariffs on most US exports, while the US maintained roughly 20% on Vietnamese imports.

Washington should clarify its economic strategy towards Vietnam. It must encourage American companies to diversify their manufacturing outside of China, avoiding overreliance on a single economy. Additionally, the US should continue enforcement against transshipment through Vietnam. These recommendations are not just purely economic; they are geopolitical and strategic.

Vietnam has emerged as a significant beneficiary of the US-China trade war. But its “silent win” must be evaluated carefully. The US should treat Vietnam as a trading ally but recognize and address the risks within the partnership. By strengthening ties, clarifying economic strategy, encouraging diversification, and addressing transshipment issues, the United States can reduce its dependence on China even more while gaining a new trade partner.