(Bloomberg) --
Vietnam President Luong Cuong forcefully warned of the dangers of a world with higher tariffs, one of the strongest criticisms so far of US President-elect Donald Trump’s approach to trade as world leaders gather this week in Peru.
“Isolationists, protectionism and trade wars lead only to recession, conflict and poverty,” Cuong told government and business leaders gathered at the APEC CEO Summit in Lima, Peru, on Thursday.
“Now more than ever it’s critical to transcend the zero-sum game mindset and guard against nationalism skewing policy decisions,” said Cuong, who was named last month as Vietnam’s president. “Every country, regardless of its size, must adhere to international law and act responsibly, acknowledging that each decision carries significant, far-reaching consequences,” he said.
Trump’s threat of a universal tariff is one of the biggest uncertainties facing Vietnam’s government. Exports account for about 85% of the Southeast Asian nation’s economy, and the US is its largest market. Vietnam had a surplus of around $100 billion with the US last year, making it a target for Trump’s policies to rebalance trade.
“Imposing new trade and investment standards without scientific rationale or objective assessment, while overlooking the unique development levels and circumstances of each country, unfairly deprives millions of job opportunities, stifles innovation and hampers business growth,” Cuong warned.
“International trade and investments must comply with regulations set by the WTO to ensure balanced interests and promote fair competition,” Cuong added, referring to the World Trade Organization, which faced criticism from Trump’s administration during his first term.
The Southeast Asian nation has set an economic growth target of 6.5% to 7% for 2025, building on an expansion of at least 7% this year as it continues to power ahead as one of the world’s fastest-growing economies.
“Trump’s election win spells weaker growth prospects for most of Southeast Asia in 2025,” Tamara Mast Henderson of Bloomberg Economics wrote in a report this month. “Within the region, Vietnam is most vulnerable to stalling foreign direct investment — its economy is more trade-reliant and its bilateral trade surplus with the US soared during Trump’s first term and over the course of the Biden administration.”
Key concerns for Vietnam include a campaign to be to be officially designated as a “market economy” by the US, as well as whether the incoming administration will prioritize finalizing a Comprehensive Strategic Partnership announced when President Joe Biden visited the nation last year.
Cuong, 67, was named president last month, the fourth official to fill the role in less than two years. His appointment took place after two previous presidents resigned for “violations” linked to the country’s sweeping anti-corruption crackdown. His predecessor To Lam, the former minister of public security, was elected Communist Party general secretary in August after the death of longtime leader Nguyen Phu Trong.
The yearslong anti-corruption campaign, which has ensnared hundreds of government officials and business executives, has been portrayed as part of Vietnam’s attempts to bolster its appeal as a destination for foreign investment in the midst of heated competition between the US and China, and to ensure the party’s legitimacy in the face of wide-ranging scandals. It’s also led to claims of bureaucratic paralysis, with officials wary of signing off on projects for fear they could be next in line.
Despite this, the economy has shown resilience this year as investment pours in. Vietnam saw growth unexpectedly accelerate last quarter, boosted by manufacturing and exports before Super Typhoon Yagi in September caused widespread flooding, leaving hundreds of people dead and creating around $3.3 billion in economic damage.
To spur growth, Prime Minister Pham Minh Chinh has vowed to cut logistical costs, improve infrastructure and speed up public spending. The government has sought to pull in capital from foreign tech giants such as Samsung Electronics Co. and Intel Corp. as the country emerges as a viable alternative to China in the production of electronics such as smartphones to basic semiconductors.
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