From trade challenges to global supply chain shifts: What is the solution?

Challenges of the wood and textile industry

At the online discussion "New US international trade policy: Forecasting global supply chains and how Vietnamese businesses can adapt" held on August 29, Mr. Pham Van Viet - Vice President of the Ho Chi Minh City Textile and Fashion Association said that the textile and garment industry has reached a turnover of 26.3 billion USD in the first 6-7 months of the year, a growth of about 9%. However, the industry is facing many uncertainties when the US imposes a 20% reciprocal tax and the possibility of up to 40% for the issue of transshipment, although this level is still unclear.

In fact, Vietnamese textile and garment enterprises are subject to a total tax rate ranging from 35.2% to 40% when exporting to the US, averaging about 37.9%.

"With this tax rate, Vietnamese textiles can still compete with Bangladesh and India, but the ability to compete with other countries has decreased significantly," Mr. Viet shared.

Another major concern is the issue of origin. About 40-50% of Vietnam's textile and garment materials are imported from China. Currently, the US has not applied origin tax on this item, but Mr. Viet expressed concern that if the US re-examines and imposes taxes based on origin, the textile and garment industry will face many difficulties.

In response, 70-80% of large Vietnamese textile and garment enterprises have completed full traceability documents. The association is also working to increase the localization rate of fabrics and input materials to 30-50% in the next 1-2 years, while converting from SOB to OBM production and developing Vietnamese brands for export.

Other solutions include preparing a communication code of conduct, drafting a green business plan, developing recycled materials and diversifying export markets.

Mr. Viet also announced that textile and garment export growth to the US decreased from 9% to 4% in July, after good growth in the first 6 months of the year.

Similarly, Mr. Nguyen Chanh Phuong - Vice President of the Handicraft and Wood Processing Association of Ho Chi Minh City (HAWA) also raised concerns about the wood industry. Mr. Phuong commented that the difference in US policies towards China and other countries, including Vietnam, is no longer too big. After the US announced a 20% reciprocal tax rate (possibly up to 40% with transshipment) in early August, by the end of August, the US also conducted an investigation into the wood and furniture import industry to bring production back to the domestic market, especially in traditional areas.

Wood industry businesses face new uncertainty as US trade policy changes.

"This information is creating a new state of instability. Previously, businesses could stabilize their operations with a 20% tax rate, but now they are facing new uncertainty," Mr. Phuong emphasized.

HAWA Vice President said that the imposition of tariffs could lead to increased prices of goods and reduced consumption in the US, while creating uncertainty about investment. US manufacturers are also not too optimistic due to unstable policies, lack of readiness in labor and raw materials.

Despite facing a "VUCA period" with fluctuations, uncertainties, complexities, and ambiguities, the Vietnamese wood industry still achieved high export turnover in the first 7 months of the year, up about 8% compared to 2024, and the US market continued to grow at a similar rate. This may be due to businesses boosting exports to "evade taxes".

Technology dominates the "game" of supply chain restructuring

Professor Nguyen Duc Khuong - Executive Director of Leonard de Vinci School of Business and Founding Chairman of AVSE Global commented that the global supply chain will continue to undergo major changes in the context of the second trade war and unpredictable policies from the US.

He emphasized that Vietnam's choice of commitment to participate in negotiations to create a stable trade environment is correct and a long-term strategy. To respond, it is necessary to "remain constant and respond to all changes", that is, to be calm, make specific judgments and proceed cautiously.

Professor Nguyen Duc Khuong - Executive Director of Leonard de Vinci School of Business and Founding Chairman of AVSE Global.

Professor Khuong pointed out the trends in restructuring the supply chain according to geopolitical and geoeconomic priorities. In particular, Professor Khuong emphasized the central role of digital technology and AI in restructuring the supply chain. Leading countries are investing heavily in AI, and many European enterprises such as Siemens (Germany), Pernod Ricard (France), and Volkswagen have applied AI and IoT.

Thereby optimizing administration, supply chain management, inventory optimization, component production control, minimizing fluctuations. Accurate market forecasting by analyzing trade data, predicting demand in the US and other markets, finding alternative markets when facing difficulties. Simulating and forecasting risks through the use of Digital Twin (digital twin) to simulate policy change scenarios (e.g. new tax imposition) and making forecasts to prepare response solutions.

The next trend is that the supply chain will be associated with increasingly high sustainability standards (ESG), especially in the European market, which also requires transparency and technology in management.

Countries and businesses need to take immediate action: take advantage of opportunities to escape the negative impacts of tariff policies, and at the same time use science and technology, new technologies such as AI and Digital Twin to simulate, create hypothetical environments for policy changes, and from there prepare solutions to respond when they occur.

In addition, it is necessary to be more proactive in finding sources of supply, partners, raw materials and export markets.

"In short, technology will play a very important role in market forecasting. Data will also play a key role in market analysis and finding new market opportunities for businesses," affirmed Professor Khuong.

He also sees a trend of smarter businesses creating a united ecosystem, sharing benefits and building sustainable supply chains together.

Dr. Tran Ngoc Anh - Indiana University (USA), founder of the Vietnam Innovation Network, supports the strategy of "made in Vietnam & assemble in USA", which means production in Vietnam and finishing and packaging in the US.

He suggested that exporters should focus on non-strategic US goods, as strategic goods will be highly protected by tariffs.

To improve transparency and adaptability, experts recommend that businesses apply technology such as blockchain to prove origin. At the same time, it is necessary to participate in US industry associations to grasp information and advocate policies. When intending to invest, it is necessary to prioritize battleground states in the US because both parties value and offer many incentives. In addition, it is necessary to approach other large markets such as China and Europe to diversify risks and constantly innovate technology in production and management.

Moonlight

Source: https://doanhnghiepvn.vn/kinh-te/tu-thach-thuc-thuong-mai-den-dich-chuyen-chuoi-cung-ung-toan-cau-dau-la-loi-giai/20250830094023752