• Vietnam's GDP growth accelerated to 7.96% in Q2 2025 due to strong export performance.
• A trade deal with the US lessened tariff threats, creating a positive outlook for Vietnam's economy.
• Export volumes surged, reaching $219.83 billion in the first half of 2025 despite tariff challenges.
• Concerns remain about a 40% tariff on transshipped goods and its impact on manufacturing sectors.

Vietnam's economy experienced a significant increase, with gross domestic product (GDP) growth accelerating to 7.96% year-on-year in the second quarter of 2025, up from 6.93% in the first quarter, according to the government data. This growth comes on the heels of a favourable trade deal with the United States that reduced previously threatened tariffs on Vietnamese goods from an alarming 46% to 20%Reuters and Bangkok Post.

The trade deal is significant because the United States is Vietnam's largest export market. Exports rose by 18.0% to $116.93 billion year-on-year, contributing to a trade surplus of $4.41 billion. Additionally, industrial production increased by 10.3%, while inflation stood at 3.57% in June, reflecting strong economic momentum despite global uncertainties, according to reports from India Times and South China Morning Post.

The optimism surrounding this new trade arrangement is palpable, as it allows Vietnam to maintain its trade surplus, which exceeded $123.5 billion last year. However, this new deal is viewed as somewhat unbalanced, granting tariff-free access to US goods while imposing a 20% tariff on Vietnamese exports, which is higher than last year's average of 9.4%. Notably, there remains a 40% tariff on goods transshipped through Vietnam to evade US tariffs, primarily targeting Chinese productshe Reuters, Bangkok Post, and India Times.

The Vietnamese government is optimistic about adjusting to the new tariff structure, as industry leaders suggest that it could encourage a shift towards higher value-added exports such as semiconductors. Dominic Scriven, founder of investment firm Dragon Capital, described the trade deal as "net-positive," alleviating concerns over severe impacts on GDPhe Reuters, Bangkok Post, and India Times.

Despite these optimistic forecasts, significant concerns remain about the sustainability of Vietnam's export-driven economy, especially considering the complexities of the tariff structure. Analysts have highlighted that the 40% transshipment tariffs could greatly impact industries reliant on Chinese components, which are integral to local manufacturing and assembly processeshe South China Morning Post and India Times.