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Flash Note: Section 301 & Impacts on Vietnam
15/09/2026 - 9:57:04 SA- The legal foundation of U.S. tariff policy changed in 2026, but the direction of policy did not. The Supreme Court removed IEEPA as the basis for the contested emergency tariffs; Section 122 supplied a 150-day bridge; USTR then advanced separate Section 301 cases supported by their own administrative records. This modular structure matters for Vietnam because the forced-labor action, the excess-capacity investigation and the intellectual-property case can be negotiated, modified or litigated independently. Relief in one proceeding would not close the others, while Section 232, safeguards and trade-remedy cases remain available alongside Section 301.
- The 12.5% forced-labor tariff effective from 24 July is important but narrower than the headline suggests. Core technology lines and products already covered by specified Section 232 measures are excluded, concentrating the direct burden on apparel, footwear, bags, toys, seafood and selected consumer products. Vietnam also starts from a weaker relative position than Bangladesh, Cambodia, Indonesia and Malaysia, which received a 10% rate and a textile/apparel quota (TRQ) mechanism tied to U.S. inputs.
- The backdrop behind headline export growth is less encouraging. In 8M2026, exports rose 22.4% YoY to USD374.84bn, but imports increased much faster, by 35.3% YoY to USD395.30bn, pushing the trade balance from a USD14.02bn surplus in the same period last year to a USD20.46bn deficit. Over the same period, the FDI sector’s surplus fell from USD32.07bn to USD10.14bn, while the domestic sector’s deficit widened from USD18.08bn to USD30.60bn. In other words, the current cycle remains led primarily by technology and the FDI sector, while domestic and labor-intensive manufacturing is considerably weaker.
- The next policy risk is therefore about production structure rather than the current tariff alone. On a trailing-12-month basis to August 2026, Vietnam imported roughly USD78.7bn of electronics from China and exported approximately USD54.7bn of electronics to the United States; the two flows increased by around 73% and 62%, respectively, compared with the previous 12-month period. Machinery shows the same direction, though at a slower pace. These corridors are central to Vietnam’s industrial success and increasingly central to U.S. origin enforcement. The durable advantage will come from demonstrable transformation, local procurement and auditable supply chains—not from final assembly by itself.
