Teflon Vietnam. This banner normally refers to the nation’s thriving trade in polymerizing tetrafluoroethylene resins used in everything from autos to cooking utensils. These days, it describes an economy to which nothing sticks, least of all US tariffs.
In the third quarter, as US President Donald Trump slapped a 20% levy on Vietnam, the economy grew a China-beating 8.22% year on year. That marked an acceleration from the 7.96% pace in the April-June period.
Being Asia’s fastest-growing economy doesn’t come without peril, of course. Particularly if the sight of US tariffs literally rolling off the back of Prime Minister Pham Minh Chinh’s economy triggers Trump.
This isn’t the first time Vietnam managed to skate around Trump’s mercantilism. By the end of Trump’s first term, from 2017 to 2021, he was miffed to learn that the jobs his policies sought to pry away from China had migrated to Vietnam, not the US.
Like a proper schoolyard bully, Trump 1.0, on the way out the door, couldn’t resist poking developing Asia one last time. Trump’s Treasury Department branded Vietnam a “currency manipulator,” while giving China a pass.
It smacked of retribution for Hanoi’s victory in the Trump 1.0 trade war. All his swipes at China did was drive production from President Xi Jinping’s economy to Chinh’s. The factories Trump thought would return to Ohio and Michigan instead moved to Ho Chi Minh City.
Part of Vietnam’s appeal to global manufacturing giants is the “mini-China” vibe officials in Hanoi have long been happy to exploit. Its smokestack-heavy economy, communist politics, growing population, low labor and land costs, 7%-plus annual growth rates over the last 10 years and physical proximity give Vietnam a familiarity halo.
The dynamic gave Vietnam a significant competitive advantage in Southeast Asia as the Trump 2.0 era arrived, marked by outsized tariffs and general chaos. That, and Hanoi reported green-lighting a US$1.5 billion golf resort in Hung Yen province for the Trump family.
Even so, Vietnam’s glaring success could make it a big target. As Finance Minister Nguyen Van Thang notes, Vietnam just posted “the highest quarterly growth since 2011, excluding the surge in 2022 due to recovery post Covid-19 pandemic.”
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In the first nine months of 2025, Vietnam’s total trade turnover, which includes imports and exports, topped $680 billion, up 17% from a year earlier. That equates to a trade surplus of $16.8 billion during the same period.
This data arrives a month after Chinh predicted exports would be up more than 12% for all of 2025. That’s not to say Vietnam is out of Trumpian harm’s way. In a recent report, the United Nations Development Programme warned that US levies could erase one-fifth of Vietnam’s shipments to the US.
Yet if history is any guide, investors might be wise to avoid betting against Vietnam’s economy. Fitch Ratings analyst Tamma Febrian expects Vietnam’s “resilient economic growth” to continue, helping to buttress the nation’s financial system.
“This has buoyed banking business volume, with system credit rising by 19% year on year,” Febrian says. “The government’s pro-growth policies together with sustained exports and foreign direct investment should maintain the supportive economic environment, underpinning banks’ asset quality.”
It’s not just “old economy” engines that are driving Vietnamese growth. As Adam Slater at Oxford Economics notes, “the AI boom is a key factor supporting trade growth among the Asian economies,” and Vietnam is among the main places in the region where “the benefits of the boom are centered.”
A recent study from Lazada–Kantar found that 42% of Vietnam’s online sellers are already using AI tools, and that AI could boost local productivity in ways Vietnam’s top-down, control-obsessed government can’t.
Yet it’s Vietnam’s success in avoiding Trump 2.0’s tactics that really made the difference in 2025. This included shrugging off the White House’s headlong assault on so-called “transshipments.”
Ironically, the Trump 1.0 period catalyzed China Inc. not just to sandbag the export sector but also to increase competitiveness in ways that the Trump 2.0 gang hadn’t noticed, notes Arthur Kroeber, economist at Gavekal Dragonomics.
Chinese exporters, he notes, “still have plenty of workarounds through transshipment and relocating late-stage production to lower-tariff countries.”
These transshipments, of course, put a bullseye on Southeast Asian economies, which Trump pledged to punish for engaging in large-scale arbitrage by passing goods through lower-tariff countries to avoid US levies.
Ironically, says Jackson Lopez, an analyst at the Lowy Institute, “the transshipment tariff might help Beijing. Pending ongoing trade negotiations, tariffs on China will stay below the rate for transshipments. This means that US importers may find it cheaper to buy directly from China, rather than risk high premiums on Vietnamese goods.”
If the Trump administration applies an overly broad definition of transshipment and rushes enforcement, it follows, “Beijing would likely outcompete its competitors for US imports,” Lopez notes. “This would undo years of Vietnamese gains in the US market, which has reduced reliance on China.”
As Hanoi’s exports to the US increase, Vietnamese companies are increasingly importing raw materials and components from China. More bilateral trade also correlates with a rise in transshipments routed through Vietnam, which are included in aggregate imports from China.
So how can increases in legitimate imports get disentangled from transshipments? This, Lopez says, is where researchers disagree.
Vietnam is a stark reminder that the blunt tools that might’ve worked in the 1980s have far less utility now. Even China, the central target of Trump’s trade war, is seen brushing off the worst of Trump’s tariffs to meet this year’s 5% growth target. And if Goldman Sachs has it right, that figure might accelerate to 6% next year.
Nor is there much in Vietnam’s recent data that gives economists cause for pause. “Vietnam’s October data dump captured easing inflation and slowing growth across industrial production, retail sales, exports and imports,” notes Sunny Kim Nguyen, economist at Moody’s Analytics.
That, Nguyen notes, included industrial production rising 10.8% year on year, after climbing 12.7% in September, and nominal goods exports rising 17.2% after climbing 24.7% in September. Imports are rising, too, up 16.8% in October after a 24.9% jump in September.
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That all suggests that Vietnamese household confidence is in decent shape. Retail sales rose 7.2% in October year on year. Nor is inflation out of control, with consumer prices rising at a 3.3% rate, not far from the US and Japan.
So far, China has had a much better-than-feared experience with the Trump 2.0 presidency. Xi’s Communist Party isn’t enjoying the 47% tariff Trump imposed. But China is winning the soft power war as Trump roils global markets, torches democratic alliances and trashes the esteem America spent decades amassing in 10 short months.
Watching Trump’s benefactor, Elon Musk, throw sand in the gears of US institutions and have his way with sensitive data — including the Treasury Department — to mysterious ends undermined trust at home and abroad, undermining the sanctity of US government debt.
Trump also blinked on his big trade war. Team Xi recently scored a one-year truce after several previous delays. It means that a US-China deal, “grand” or not, won’t materialize until early 2027, at best.
Wall Street is also onto this White House. The “TACO” trade — based on the idea Trump always chickens out — has been a winner all year. Many investors have concluded (often rightfully) that Trump’s tariffs are more bark than bite.
As China uses the Trumpian chaos to win new friends and secure new markets for its goods, Vietnam is offering Global South nations a blueprint for navigating around the most mercantilist US leader in 125 years. And, odds are, hoping no one in the White House notices that Teflon Vietnam is winning its second Trump trade war.
Follow William Pesek on X at @WilliamPesek
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