About 60 percent of Samsung’s global smartphone production occurs in Vietnam, much of it bound for the U.S., where Samsung is the second-largest smartphone vendor.
However, this supply chain is under threat due to potential U.S. tariffs of up to 46 percent. A temporary 90-day reprieve has delayed the tariff implementation, keeping it at 10 percent, but significant uncertainty remains, Reuters news report said.
U.S.-Vietnam Trade Tensions Escalate
Vietnam’s $120 billion trade surplus with the U.S. has placed it under scrutiny from the Donald Trump administration. Hanoi is negotiating to reduce the tariff to a more manageable range of 22 percent–28 percent. However, concerns persist that the U.S. may follow through with the higher rate in July if no deal is reached.
Samsung Considers Shifting Production
Faced with rising uncertainty, Samsung and its suppliers are exploring production adjustments. Options include shifting output to India or South Korea, though these moves would be costly and complex. No final decision has been made, and Samsung has publicly remained noncommittal.
Vietnam’s Competitive Edge Erodes
The situation adds to Vietnam’s growing manufacturing challenges. Power shortages, rising labor costs, a shortage of skilled workers, and a new global minimum tax regime have all affected its attractiveness to foreign investors. These factors, combined with tariff threats, could reduce Vietnam’s appeal relative to competitors like India.
Apple Faces Even Bigger Tariff Hke
Samsung’s rival, Apple, is also under pressure, as tariffs on Chinese imports rose to 145 percent. Apple produces around 80 percent of U.S.-bound iPhones in China. The company has not publicly commented on its response strategy.
Foreign Firms in “Wait and See” Mode
Many foreign manufacturers in Vietnam, including South Korean companies, are adopting a cautious approach. Initial panic over the tariffs has given way to uncertainty, with some companies preparing for potential layoffs if the situation worsens.
India Could Benefit
Economists suggest that Vietnam’s potential loss could be India’s gain. India is pushing for a trade deal with the U.S. and could attract more manufacturing investment if companies begin shifting away from Vietnam.
Worker Anxiety on the Rise
Factory workers, such as those at Samsung’s plant in Thai Nguyen, are increasingly worried about job security. Some fear large-scale cuts if Samsung reduces production in Vietnam due to the tariffs and shifting economic conditions.
