Vietnam location strategy: tariffs, supply chains, and the case for planning ahead

Chinese and Taiwanese companies are rapidly shifting production into Vietnam in response to higher U.S. tariffs and to strategically diversify their supply chains. As a result of this significant investment, Vietnam’s exports to the United States are increasing and along with it the bilateral trade deficit. While this trend reinforces Vietnam’s position as a key alternative to China, it also introduces potential exposure to future U.S. tariff policies, particularly with the current state of shifting U.S. trade agendas, as this recent Bloomberg article noted.

For companies diversifying their investments from China or other high tariff geographies, evaluating new manufacturing locations needs to move beyond capex and opex costs and qualitative operational considerations alone. Trade exposure, rules of origin, and geopolitical sensitivities are increasingly shaping market access, which will influence the choice of not only manufacturing locations but more sensitive operations like treasury functions, data centers and IT infrastructure support and software development centers. A factory in Vietnam serving the U.S. market, for example, may face different risks depending on its ownership structure, supply chain inputs, and product classification.

The case for a structured location strategy

This is where a structured location strategy becomes essential. Rather than reacting to policy shifts after the fact, businesses should proactively assess scenarios such as tariff changes, supply chain reconfiguration, and export market dependencies. A systematic location strategy and more focused site selection approach, grounded in data, risk modeling, and long-term planning, allows companies to balance opportunity with resilience.

Vietnam remains a high-potential destination for manufacturing investment, but like any market, success depends on informed decision-making. In an era of evolving trade policies, the winners will be those who plan not just for growth, but for uncertainty.

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Duc Le is the Consulting Manager at Tractus Vietnam office.