Trump 2.0: Why a production transfer from China could benefit US-focused manufacturers in 2025

As Donald Trump begins his second term as US President in 2025, his threats to impose tariffs of up to 70% on Chinese imports is set to undermine the competitiveness of Chinese-made products in the US and intensify the global supply chain shifts that were triggered during his first term in 2016. These tariffs, along with previous trade tensions between the US and China, and the disruptions of the COVID-19 pandemic, have accelerated the adoption of the "China + 1" strategy by global businesses, positioning Vietnam as a leading alternative for manufacturing. 

Why Vietnam is a smart manufacturing choice in 2025

Against this backdrop, Vietnam has emerged as a prominent global manufacturing hub, driven by its cost efficiency, favourable investment climate, strategic location near major sea routes, trade agreements, infrastructure investments, and growing foreign direct investment – all of which have contributed to its robust economic growth in 2024.

But while Vietnam offers significant advantages and opportunities for manufacturers looking beyond China, challenges persist, including underdeveloped supply chains, reliance on imports, and a smaller pool of highly skilled labour compared to China. However, none of these challenges are insurmountable and businesses can effectively address these obstacles with the support of an experienced sourcing partner.

Sourcing Allies, a trusted Vietnam sourcing agent, leverages its deep expertise in both China and Vietnam to help innovators, creators and established businesses to navigate these complexities, optimise costs, and ensure quality production. From product design to compliance and shipping, we provide comprehensive end-to-end support, enabling you to focus on innovation and market success.

If Vietnam is your next manufacturing destination, let Sourcing Allies guide your journey with confidence and expertise. Contact us today to turn your vision into reality.

For a detailed analysis and deeper insights, read the complete article below:

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Why Trump 2.0 makes 2025 the year to shift US-focused manufacturing beyond China

Donald Trump has made it clear that hefty tariffs on Chinese imports will be a cornerstone of his policies as he assumes charge as US President for the second time in 2025. This move doesn’t come as a surprise to many given that he implemented similar measures during his first term in 2018. At that time, Trump imposed a 25% tariff on 800 strategically significant imports from China, starting a trade war.

What sets 2025 apart is the scale of his proposed tariffs. On the campaign trail for ‘Trump 2.0,’ he pledged to impose a staggering 60% tariff on Chinese imports and 10% on imports from all other countries. Following his victory, Trump doubled down on these threats, vowing to impose an extra 10% to the proposed China-specific tariff, taking it to a total of 70%, if Beijing failed to act convincingly to curb the flow of fentanyl into the United States.

Trump and analysts have cited several reasons for these tariffs, including raising revenue, protecting American industries, and serving as a political strategy to energise his support base.

The debate over whether tariffs truly benefit American industry is a topic for another time. What’s clear, however, is that tariffs on Chinese goods – both existing and proposed – have driven American and European businesses to diversify their supply chains over the past six to seven years, with Vietnam emerging as a key alternative. Several major companies have adopted the 'China + 1' strategy, relocating some or all of their manufacturing to countries like Vietnam while still maintaining a presence in China. The COVID-19 pandemic, which further exposed weaknesses in the global supply chain and underscored the risks of over-reliance on China, accelerated the adoption of this strategy, cementing Vietnam’s role as a key manufacturing alternative.

In this blog, as experienced China and Vietnam sourcing agents we explore why Vietnam is a smart choice for manufacturing in 2025 whether you’re a first-time manufacturer, an innovator scaling a complex idea, or considering relocating production from China for any reason. We cover the benefits of manufacturing in Vietnam, key considerations, potential risks, and how the right sourcing agent in Vietnam can ensure a seamless, cost-efficient transition.

Why Vietnam is attractive for manufacturing in 2025

In 2022, manufacturing contributed more than 20% to Vietnam’s GDP, highlighting the sector's critical role in the country's economic growth. 

In early 2025, official data revealed that 2024 had been a strong year for Vietnam, reflecting growing investor confidence in the country's manufacturing potential and its competitiveness in global supply chains. Its economy expanded by 7.09% in 2024 to reach $476.3 billion, surpassing the 5.05% growth rate recorded in 2023, according to Reuters. Notably, its fourth-quarter GDP growth of 7.55% marked the fastest quarterly expansion in over two years, highlighting the country’s resilience and growing appeal as a manufacturing hub. This growth was driven by robust export performance and sustained foreign investment inflows. Exports surged 14.3% year-on-year to $405.53 billion, led by shipments of electronics, smartphones, textiles, and agricultural products. Meanwhile, Foreign Direct Investment or FDI reached a record high of approximately $25.35 billion, marking a 9.4% year-on-year increase, according to official reports.

The figures above highlight Vietnam’s growing prominence as a key player in the global manufacturing landscape. Its strong economic performance, favorable investment climate, expanding trade network, robust logistical infrastructure, proximity to China, and affordable labour and overhead costs make it an increasingly attractive destination for businesses looking to start, relocate, or diversify their manufacturing operations. Below, we explore the key benefits of manufacturing in Vietnam. 

Benefits of manufacturing in Vietnam

1. Low cost of labour: Vietnam’s cost efficiency is one of its most appealing aspects for manufacturing. With hourly manufacturing wages below $3 — about one-third of China’s — along with lower costs for leasing space, gas, and electricity, Vietnam offers significant savings. Moreover, 67.3% of its population is working age, providing a trainable labour force. The country also benefits from business-friendly laws as compared to its competitors. Further enhancing its appeal, Vietnam attracts foreign investors with tax incentives and subsidies, particularly in designated economic zones, making it a highly competitive alternative for global manufacturing.

2. Cost-effective transportation and growing logistics infrastructure:  Vietnam’s strategic location on major trade routes provides logistical advantages for global shipping. Its proximity to manufacturing hubs like China and key markets such as ASEAN countries, Japan, and South Korea enables faster and more cost-effective transportation of raw materials and goods. This geographical advantage has encouraged major companies like Samsung and Foxconn to relocate parts of their production to Vietnam. The logistics sector is rapidly growing too, driven by robust import-export activities, a booming e-commerce market and modern infrastructure, including seaports, warehousing facilities, and technologies like AI and automation that are being used to streamline supply chains. Ranking among the top five ASEAN countries in logistics, Vietnam benefits from strong investment and government support for green and sustainable practices, positioning it as a leading regional logistics hub and attractive destination for efficient manufacturing solutions.

3. Sector growth and industry development: Vietnam’s key manufacturing sectors, including machinery, electronics, steel, wood, textiles, and footwear, are experiencing rapid growth, driven by advancements in production technologies, process optimisation, and increasing integration into global supply chains. For instance, Vietnam has become a major exporter of electronics, ranking as one of the top global suppliers of smartphones and components. In 2022 it exported $152B in electrical machinery and electronics, making it the 6th largest exporter of electrical machinery and electronics in the world. The main destinations for these exports were the United States, China, South Korea, Hong Kong, and Japan.
   
   Similarly, its thriving textile and footwear industries, which cater to leading global brands such as Nike, Adidas and Uniqlo, are bolstered by investments in modern machinery and sustainable manufacturing practices. 

4. Opportunities for market expansion
   Manufacturing in Vietnam offers businesses access to significant growth opportunities in both the US and European markets. It has entered into approximately 15 free trade agreements with partners across the world. The EU-Vietnam Free Trade Agreement or EVFTA (effective 2020), the UK-Vietnam Free Trade Agreement or UKVFTA (effective 2020), and the US-Vietnam Bilateral Trade Agreement or BTA (effective since 2001) are just a few of the agreements that have opened doors to expanded trade and cooperation, positioning Vietnam as a gateway to these lucrative markets.
   
   Additionally, Vietnam is a signatory to several regional and multilateral trade agreements, including the ASEAN Free Trade Area (AFTA), Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), ASEAN-Japan Comprehensive Economic Partnership (AJCEP), ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA), ASEAN-Korea Free Trade Agreement (AKFTA), and the Regional Comprehensive Economic Partnership (RCEP). These agreements cover countries like Japan, Australia, South Korea, Mexico, New Zealand, Canada among many others.
   
   By leveraging reduced tariffs and preferential trade terms offered under these agreements, Vietnam is positioned as an attractive destination for export-oriented manufacturers. These agreements provide access to a vast network of markets and facilitate smoother trade processes, creating an ideal environment for companies to establish manufacturing and integrate into regional and global supply chains.

To sum up, Vietnam is quickly becoming a manufacturing hub of choice for companies looking for cost-effective, high-quality production with access to expanding global markets.

Reality Check: Challenges of manufacturing in Vietnam

As China and Vietnam sourcing agents with 25+ years of experience, it would be remiss not to address the fact that while Vietnam is indeed a promising alternative to China, there are some challenges.

First, while Vietnam has its strengths as a manufacturing hub, it is not yet on the same level as China in terms of manufacturing capacity, quality, and expertise. China remains 10–15 years ahead in key areas such as advanced manufacturing capabilities, state-of-the-art machinery, R&D, and workforce specialisation.

But were the US to impose significant tariffs on Chinese exports, such as Trump’s proposed 60% tariff, it could substantially raise the cost of manufacturing in China for US-bound exports. In this scenario, Vietnam's cost advantages might outweigh its current limitations, making it a more viable and attractive manufacturing alternative for American businesses.

That said, certain industries are particularly well-suited to Vietnam, including electronics, machinery, plastics, furniture, garments and home decor. Manufacturers operating in these sectors should find the country a favourable and efficient manufacturing choice as local capabilities align well with the needs of these industries.

In the next section, we will explore some of the key challenges manufacturers face when operating in Vietnam. However, we believe none of these challenges are insurmountable if you partner with an experienced sourcing agent in Vietnam. As seasoned sourcing professionals with deep expertise in both China and Vietnam, we specialise in guiding our clients through their options, helping them navigate the current market landscape.

1. Underdeveloped supply chains: While supply chains are critical for specialised manufacturing, Vietnam’s systems are still underdeveloped compared to China’s well-integrated networks. This affects Vietnam’s ability to support complex, high-volume production in certain sectors. In contrast, China has perfected assembly line-like efficiency, not just within individual factories but across entire manufacturing clusters. These clusters, often focused on specific industries such as textiles, function like macro assembly lines, with small to medium-sized enterprises acting as key components that efficiently feed into the larger manufacturing ecosystem. This setup promotes resource optimisation and cost efficiency.
   
   That said, Vietnam’s geographical proximity to China and its close relationship with the country have made sourcing manufacturing inputs from China relatively seamless. In fact, companies have leveraged this advantage as a workaround for existing US tariffs on China. Experts have noted that the increase in Chinese imports to Vietnam has coincided with a rise in Vietnam's exports to the US, highlighting the country’s role as a key intermediary in global trade.

2. Dependency on imports: Due to an underdeveloped supply chain infrastructure, Vietnam remains reliant on importing key raw materials and components, particularly from China. This can increase costs and create vulnerabilities during sudden supply chain disruptions, such as those experienced during the COVID-19 pandemic. However, with ongoing investments in port infrastructure, trade agreements with neighboring countries, and its strategic position on major trade routes, Vietnam is well-positioned to mitigate many of the challenges associated with import dependency.

3. Labour: While Vietnam offers a young, growing and low-cost workforce, finding highly skilled workers – particularly in specialised fields – can be more challenging than in China, where a larger labour pool and decades of manufacturing experience have created a more readily available talent base. With a smaller population compared to China, this can strain production timelines and scalability in Vietnam as global demand rises and more manufacturers shift operations to Vietnam.

4. Skill development: Vietnam’s workforce has relatively fewer specialised skills in high-tech or precision-based manufacturing compared to some other countries. This necessitates additional investment in training and upskilling programs for those in more advanced manufacturing sectors.

5. Export standards: Many Vietnamese factories lack critical safety certifications, modern machinery, and effective quality control systems. Meeting international standards, such as ISO certification, FSC certificates (for the wood industry), and stricter European environmental and product-quality regulations, remains a significant challenge for such factories. However, Vietnamese businesses are increasingly focusing on improving product quality, optimising production processes, and integrating technology into their manufacturing systems, which makes attaining critical certifications easier.

As we said before, while these challenges may seem significant, they are by no means insurmountable. With the right sourcing agency – one that has staff on the ground in both China and Vietnam – businesses can navigate these complexities effectively. A seasoned sourcing agency can leverage local knowledge, industry connections, and operational expertise to help mitigate risks, optimise costs, and identify the most viable manufacturing solutions tailored to specific business needs. The key is working with a partner who understands both markets deeply and can provide strategic guidance at every step of the sourcing process. What we do is we allow you to focus on your product and sales while we handle the logistics, paperwork, and production challenges for you.

Conclusion: Let's make your manufacturing journey seamless

At Sourcing Allies, our vast experience and network of factories, suppliers, and partners help us ensure your product vision becomes a reality –  whether you’re starting from scratch or enhancing an existing assembly line. We handle everything, from product design to sample creation to full production at scale, compliance (CE, UKCA, UL certifications), shipping, customs clearance, assembly and quality control.  Our commitment is to ensure you keep your promise to your customers. With years of expertise across China and Vietnam, we are more than a Vietnam sourcing agency – we’re your trusted partner through every step of the manufacturing process.

We’ve developed a network of reliable partners across Asia, ensuring we connect you with the right resources for your product. Need help with branding, digital marketing, or even professional photography for investor pitches and social media? We’ve got trusted experts who specialise in these areas, and they’re ready to support you on your journey.

We pride ourselves on answering the tough questions, like "When can we have a great product in front of customers?" With us by your side, the answer is always: "We'll make it happen."

If you're ready to take the next step and partner with a team that understands the nuances of manufacturing, get in touch with us today. Let us help you bring your product to market – quickly, efficiently, and with confidence.

Contact us now to discuss your manufacturing needs, and let’s turn your ideas into reality.

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