In July, Vietnam experienced a trade deficit of $3.59 billion as the growth in imports exceeded that of exports. This continued gap highlights the expansion of manufacturing capabilities in the country, even though export-focused sectors are grappling with new challenges from U.S. tariffs and increasing energy expenses caused by conflicts in the Middle East.
Exports and imports in the numbers
Exports for the month reached $53.1 billion, reflecting a 25% year-over-year increase, which aligns with economists' forecasts. Most of the imported goods included raw materials, machinery, and spare parts essential for production. The government has set a target to grow the economy by 10% annually, aiming to surpass the 8% growth seen in 2025. This expansion is to be fueled by export growth and increased investment.
Industrial activity in Vietnam expanded further in July, as new orders, production, and purchasing all showed signs of growth. This surge in factory output was supported by a decrease in production costs linked to a drop in oil prices. These developments signal resilience in the nation's export-driven manufacturing base.
US scrutiny and trade pressures
Vietnam became a focal point for U.S. trade oversight in July. It was among the 60 countries hit with new tariffs in June due to concerns about labor practices in supply chains, particularly those involving forced labor. U.S. customs officials have initiated spot inspections at factories linked to China, assessing the origin of materials and the value addition process in Vietnam.
The U.S. is urging Vietnam to address a range of issues, such as removing non-tariff barriers, enforcing stricter controls against transshipment, and improving intellectual property protections. These measures are seen as necessary to facilitate a final resolution to the current tariff-related tensions between the two countries.
Trade with China and the US
China remains the primary source of imports for Vietnam, with goods valued at $138.6 billion shipped during the first seven months of 2026, representing a 39.7% increase. During the same period, Vietnam recorded a $93 billion trade deficit with China, underscoring the imbalance in trade flows between the two nations.
However, the U.S. continues to voice concerns about the transshipment of Chinese goods through Vietnam to circumvent tariffs. This practice is seen as a significant issue in U.S.-Vietnam trade relations.
Inflation in Vietnam rose to 4.45% year-on-year in July, approaching the government's annual target of around 4.5%. Despite this, the central bank has expressed caution, warning that inflation may escalate to as much as 5.5% this year if global energy costs remain high due to ongoing geopolitical tensions.