New challenges for export businesses

The U.S. Trade Representative (USTR) has just released the findings of its investigation under Section 301 of the Trade Act of 1974, concluding that 60 economies, including Viet Nam, are not applying or effectively enforcing import bans on goods produced using forced labor.

The US has again proposed imposing tariffs.

According to the findings of the USTR investigation, the agency accused many economies of failing to enact and effectively enforce bans on imports of goods produced using forced labor. Viet Nam is among the economies directly affected by the trade sanctions proposed by the USTR. Notably, the US classified Viet Nam among the 54 economies that "fail to enact and effectively enforce" bans on imports of goods produced using forced labor. This group was assessed as having a higher degree of practical deficiencies compared to the group of six economies that were only concluded to "fail to effectively enforce" (including Canada, Ecuador, the EU, Indonesia, Mexico, and Pakistan – partners that already had bans or commitments in trade agreements with the US).

The USTR argued that the failure of trading partners to effectively prevent goods linked to forced labor created an unfair competitive environment for American workers and businesses. The agency claimed that businesses using forced labor could reduce production costs, thereby gaining an unfair competitive advantage in the international market. Immediately afterward, the Viet Namese Ministry of Foreign Affairs emphasized that the investigation's conclusions did not accurately reflect the reality and Viet Nam's efforts to prevent and mitigate forced labor. It also affirmed that Viet Nam strictly prohibits all forms of forced labor, adheres to the conventions of the International Labour Organization (ILO), and provided full information to the US during the investigation.

The Viet Nam Chamber of Commerce and Industry (VCCI) reported that the USTR proposed a two-tiered structure for additional punitive tariffs based on value. Specifically, a 10% tariff would apply to economies that have imposed bans, have made commitments through reciprocal trade agreements, or have implemented partial control mechanisms. A 12.5% tariff would be applied broadly to all remaining economies, including Viet Nam. VCCI warned that, given that the US remains Viet Nam's largest export market, the widespread imposition of a 12.5% additional tariff would directly undermine the competitiveness and erode profit margins of key industries such as textiles, footwear, wood products, electronics, and seafood.

Proactively take advantage of the "golden time" before the big moment.

Responding to a reporter from Thanh Nien newspaper regarding the proposed latest tariff, a seafood business in Ho Chi Minh City stated that the subsequent tariff imposition was something the business community had anticipated after the previous failed retaliatory tariff. The most worrying aspect is not the 12.5% rate alone, but the possibility that the US market is simultaneously opening multiple fronts: forced labor, intellectual property, rules of origin, and the trade deficit.

A textile and garment business leader said this is only a policy proposal from the US and not a final decision. "This is an inappropriate imposition, and we will continue to petition against it. However, if this proposal is officially implemented, the textile and garment industry still has the opportunity to benefit from preferential treatment because Viet Nam is currently the largest importer of US cotton, accounting for about 45-50% of the total cotton imported by the entire industry. In fact, the USTR has also proposed a separate mechanism for the textile and garment industry, allowing a certain amount of goods to enjoy lower preferential tariffs. This is a favorable condition for Viet Nam to be allocated a certain quota to enjoy more preferential tariffs, if this tariff mechanism is officially approved," this leader shared.

The Viet Nam Association of Seafood Processing and Export (VASEP) stated that there is currently no specific information regarding whether seafood products are eligible for exemption. However, the new move by the US indicates a growing trend towards requirements for traceability, supply chain transparency, and compliance with international labor standards. VASEP will continue to collect and synthesize opinions on the impact of the proposed sanctions, using this as the basis for a commentary to be submitted to the USTR within the comment period. The association also requested its member businesses to promptly provide information and opinions related to the matter so that they can be compiled and forwarded to the Ministry of Industry and Trade and the Ministry of Agriculture and Environment in a timely manner, providing a basis for counter-arguments to be submitted to the USTR.

On June 5th, representatives from the Legal Department of the Viet Nam Chamber of Commerce and Industry (VCCI) also announced that businesses should submit their opinions immediately so that the agency can compile them before the deadline of July 6th, 2026. According to VCCI, this is a crucial period for state management agencies, industry associations, and the export business community to proactively develop and submit written comments and register to participate in public hearings to lobby partners to expand the list of excluded goods for key export items; and to clarify the actual measures to prevent and combat forced labor that Viet Nam is striving to implement, reflecting the reality of Viet Namese businesses' operations and highlighting Viet Nam's efforts to improve the business environment, ensure compliance with labor standards, and develop transparent and sustainable supply chains.

"Since the 10% tariff is reserved for countries that already have bilateral trade bans or commitments, in the worst-case scenario where the tariff cannot be changed, Viet Nam needs to proactively research and improve the legal framework prohibiting the import of goods produced using forced labor, or include this content in bilateral trade negotiations. This will be a solid legal basis to lobby the US to move Viet Nam from the 12.5% tariff group to the 10% group," a VCCI representative proposed.

Source: Vietnam.vn