July 29, 2025

Welcome to The Sidekick, a monthly procurement newsletter dedicated to Sourcing Heroes around the country.

Una is a group purchasing organization that helps over 10,000 active members save more money and simplify procurement.

Join us today at www.una.com.

Plus Prime Day supply chain planning.

Welcome back to The Sidekick, Una’s information-packed newsletter for Sourcing Heroes everywhere!

Vietnam has recently become the second nation to hammer out a trade deal with the U.S. after the Trump administration upended the status quo with a blistering series of tariff announcements earlier this year.

Does this mean Vietnam is currently a great place to outsource American manufacturing? Find out below. 

We also take a look at the meticulous supply chain planning behind Amazon Prime Day, and LEGO’s block-solid focus on sustainability.

Subscribe below so you never miss an issue!

Let's get into Issue #019...

What procurement leaders need to know.

Let’s start with the headline facts.

In early July, the U.S. and Vietnam announced a trade deal that establishes a 20% tariff on Vietnamese goods entering the States. This is seen as a win for Vietnam after the Trump administration’s initial highball of 46%.

Because it consistently runs a trade surplus with the U.S., Vietnam will offer zero tariffs on American products entering their country, and provide preferential access for certain American goods, including SUVs.

Vietnam was - and still is - particularly vulnerable to tariff volatility because U.S. exports account for nearly one third of the nation’s GDP, so it’s no surprise that Hanoi was keen to close a deal as soon as possible.

But there’s an important caveat to this rule. Any goods imported from Vietnam that are deemed to have been transshipped from China will be slugged with double that rate, at 40%.

Vietnam has been accused in the past of being a conduit for Chinese goods to bypass China’s significantly higher tariffs. But this doesn’t mean goods are being unloaded from Chinese ships to Vietnamese ones and sent to the USA.

The term “transshipment” is being applied more broadly to Vietnamese goods that are manufactured using Chinese materials.

According to The Guardian, China is undeniably Vietnam’s top source of imports and heavily relied upon for raw materials for electronics, footwear, furniture, and more. Vietnam, in essence, is a manufacturing hub rather than an end-to-end producer.

An expert on this topic, Dr Nguyen Khac Giang, pointed out that as a manufacturing hub, “Vietnam takes inputs from other countries and makes value-added stuff, then exports it to other countries. It is unrealistic to expect most Vietnamese goods, other than agricultural products, to be made entirely in Vietnam.”

What do the numbers say? The most damning chart we’ve seen on this subject was produced by researchers at IMD, who noted that Vietnam’s post-trade-war surge to exports to the U.S. almost perfectly mirrors its rising imports from China.

Perhaps the real question about transshipment should be what proportion of a Vietnamese product can be made from imported (Chinese) materials. Or should we ask exactly how much value-adding has occurred in Vietnam?

What if Chinese companies, to avoid this situation, decide to set up shop in Vietnam like they’ve done in Mexico? How will the U.S. investigate and prove any claims of product origin?

As of the last available update on July 10th, it’s important to note that the deal has only been announced but not finalized.

Vietnam has long maintained a balancing act between the U.S. and its powerful northern neighbor, and must be wary not only to avoid antagonizing China as a trading partner and major source of imports, but also around the unresolved question of the South China Sea.

With average monthly salaries around $261, Vietnam is one of the most affordable places for manufacturing, especially compared to rising wages in China.

Importantly, the Vietnamese government is on board, pushing for training programs and better infrastructure to support this growth. The workforce is not only large and young but also increasingly well-educated, with a growing number of skilled workers popping up in fields like textiles and electronics. 

But will Vietnam be making iPhones any time soon? There have certainly been a series of announcements recently about Vietnam’s attempts to position itself as a key player in microchip manufacturing, but how long will it take to compete with the likes of China and Taiwan?

At present, the answer is yes. Vietnam is building manufacturing infrastructure fast. It has a large and increasingly skilled workforce. Shipping routes are fairly straightforward and safe, unless tensions with China once again rise over the South China Sea. 

But most importantly, Vietnam has something that most other manufacturing hubs do not - a trade deal with the United States. Once signed, this deal will provide American businesses with much-needed certainty in an environment where rollercoaster tariffs have become the norm.

Unless something unusual happens between now and then, Vietnamese goods will attract a 20% tariff, while goods deemed “transhipped” will be slugged with 40%. We can work with that. 

Keeping a pulse on the industry.

Subscribe to The Sidekick.

Subscribe to receive The Sidekick in your inbox. New issues are published every month.