Jayson Wu, the Chinese owner of a furniture factory in Hanoi, has no idea what he will do if US President Donald Trump goes ahead with his unprecedented “Liberation Day” tariffs. The plan – which will raise US duties on goods from Vietnam by 46 per cent – has not come into effect yet, but it has already hit his business like a bomb. “My US clients have cancelled all their orders, and the factory has come to a standstill,” Wu said. “I can only wait to see what happens with the tariffs on the 9th. Otherwise, where can I move the factory now? Most Southeast Asian countries are also facing tariffs.” Wu is one of many Chinese business owners in Vietnam who find themselves facing a dilemma as Trump threatens to launch a full-blown global trade war. Chinese manufacturers – particularly those in the electronics, furniture and textiles sectors – have flocked to Vietnam since 2018, when Trump imposed sweeping tariffs on Chinese imports during his first term in office. For Chinese businesses, Vietnam offered a way to avoid US duties aimed at China, as well as low labour costs, cheap rent, and stable trade relations with China thanks to the Regional Comprehensive Economic Partnership (RCEP). A string of major Chinese companies including electronics firm TCL Technology and electric vehicle maker BYD set up new facilities in Vietnam, with Chinese investment in the country surging 77.6 per cent year on year to reach US$4.47 billion in 2023. Wu also made the move in 2019, as he decided to uproot his cabinet making business from China to the Vietnamese capital to sidestep US anti-dumping duties on Chinese wooden furniture. The influx of Chinese investment helped turn Vietnam into one of the world’s fastest-growing export hubs. In 2024, the country’s exports rose 14.3 per cent year on year to US$405.5 billion, with nearly one-third of those goods going to the US market. But the surge in exports – which led to Vietnam running a record trade surplus with the US, at US$123 billion – ultimately made the country a primary target of Trump’s reciprocal tariffs. Last week, Washington announced plans to impose tariffs on dozens of trading partners, with Vietnam facing one of the highest rates at 46 per cent. The package also included a 34 per cent hike in duties aimed at China. The move threatens to deal a heavy blow to the Vietnamese economy, with Dutch investment bank ING estimating last week that the tariffs could put 5.5 per cent of Vietnam’s gross domestic product at risk. The mood among Chinese business owners in Vietnam has turned pessimistic, especially after they learned that Vietnam would face an even higher increase in levies than China, said Liu Jie, who runs a consultancy helping Chinese manufacturers set up operations in the country. “We’re all waiting for the final tariff decision on the 9th – if they come down to even 20 per cent or 30 per cent, it would bring some relief,” said Liu, 42. Unlike China, which has hit back against US tariffs by announcing retaliatory duties, Vietnam has offered to slash its tariffs on American products to zero in an attempt to secure a deal with Washington. But White House trade adviser Peter Navarro has criticised the offer, arguing that it is “the non-tariff cheating that matters”. He pointed to the practice of Chinese goods being transshipped through Vietnam as an example of such violations. “Everyone’s hoping the government can work out a favourable tariff deal with Trump,” said Liu. “We’re really in a wait-and-see situation right now.” Many Chinese entrepreneurs fear their efforts to establish a new industrial base overseas have been undone, Liu added. Relocating again would be difficult, expensive and probably unhelpful, given the US plans to raise duties on countries across Southeast Asia. “Setting up factories in Vietnam isn’t something that happens overnight,” Liu said. “It’s not just about time and costs – it’s part of a broader global strategy, a long-term plan. You can’t just pack up and leave after a day or two. It doesn’t work that way.” Another Chinese business owner, surnamed Zhao, said he had decided to freeze plans to set up a new facility in Vietnam since Trump’s announcement last week. Zhao, who specialises in exporting raw materials for health products to the US, travelled to Vietnam in January, as he was interested in taking advantage of the country’s cheap labour and developing tax system. But he is now rethinking his strategy. “Everything is now about wait and see,” said Zhao, who gave only his surname for privacy reasons. “The international environment is so unstable, it’s not the right time for quick decisions.” “If Vietnam and the US don’t come to terms on tariffs, I will have to lose profit to continue production. While tariffs won’t be fatal to my business for the time being, I’m not sure yet where I should choose as my next offshore destination,” he added. “But one thing is clear: my future factory will not be located in the US, where labour costs are very high.”