Civil servants in Vietnam are losing their jobs as the country tries to find a balance to minimize the impact of the latest US trade policies.
President Donald Trump’s tariffs and a struggling Vietnam’s export-dependent economy, have led to the abolition of tens of thousands of government positions.
Vietnam’s economy, once a success story of Southeast Asia, is now trying to wave off a storm of tariffs with bureaucratic restructuring, with no reprieve in sight. The country’s exports, which constitute nearly 90% of its GDP, will be severely impacted by the Trumpian 46% tax. Residents and policymakers fear that the country has not seen the worst of it yet.
“In Vietnamese, we call it a ‘cut-throat rate,’ which will basically destroy our businesses,” said Le Dang Doanh, an economist and former government adviser.
Still, Prime Minister Pham Minh Chinh told the press on Thursday that the US tariffs imposed on Vietnam do not reflect the two nations’ warming ties.
Jobs and families’ income sources in jeopardy
In Ho Chi Minh City, Tran Anh Minh, a local shop manager, told Bloomberg that tariffs on exports will lead to the closure of several factories. “A lot of people will lose their jobs,” he said.
Millions of Vietnam’s workers who rely on sectors like textiles, electronics, and footwear for their livelihoods are the ones who have suffered the hardest.
Ironically, Vietnam had previously benefited from the US-China trade conflict, which had pushed companies to relocate their manufacturing to the Southeast Asian nation to avoid Chinese tariffs.
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The change had injected vitality into Vietnam’s economy, creating nearly a million new jobs. However, with the new tariffs in place, the country’s position as a global manufacturing hub is now pertinently under threat.
“This is a significant loss for all,” reckoned Duong Thi Ngoc Dung, vice chairwoman of Vietnam’s Textile & Apparel Association and a factory owner. “The tariff will also drive up prices in the US.”
Vietnam struggles for leverage against US trade policies
Vietnam is “small” in comparison to its neighbors, China and the European Union, which have far more leverage in international trade negotiations. Although the country holds a trade surplus with the US, amounting to $123.5 billion, Vietnam’s average citizen earns just $330 a month, and as a minor consumer of American goods, the nation has little to naught bargaining power.
According to Bloomberg, Vietnam’s economy grew at an average rate of 7% in 2018 and 2019 before slowing during the pandemic. It rebounded in 2023 with a 7.1% expansion, adding nearly a million jobs, partly due to the US-China trade war, bringing the labor force back to over 56 million after a temporary decline during the pandemic.
The numbers are almost inevitably going to drop down now, with those still employed slowly coming to terms with the fact that they could become jobless soon.
The Vietnamese government is reportedly working to address the fallout from the tariffs. Deputy Prime Minister Pham Binh Minh is scheduled to visit the US to meet with officials and advocate for a less stringent policy push.
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The PM will certainly have his work cut out for him in convincing President Trump, as other Southeast and South Asian nations, also affected by US tariffs, are competing for the same manufacturing contracts.
Vietnam’s federal resizing is deeper than US DOGE
Per a Friday Nikkei Asia news update, Vietnam is dismantling large parts of its state apparatus in an effort to “modernize” the government under the leadership of Communist Party General Secretary To Lam.
Moving a step further than the US Department of Government Efficiency (DOGE), the goal is to make the country more efficient for it to become a high-income economy by 2045.
Nearly half of the country’s provincial-level governments are to be merged, and more than 22,000 civil servants have already lost their jobs. The government plans to dismiss up to 80,000 more by August.
“Without streamlining the [state] apparatus, we cannot achieve development,” said Lam in a speech to the National Assembly.
The restructuring has already led to the closure of state-owned entities like Vietnam Multimedia Corp. (VTC), which abruptly laid off 1,000 employees in January. “Many people at VTC lost their jobs,” said one former employee. “They didn’t have time to prepare.”