Source: CNBC
Date: 3rd July 2025

Higher duties raise cost and compliance concerns across global apparel supply chains.

The latest U.S.–Vietnam trade deal introduces significant tariffs—20% on goods made in Vietnam and 40% on products deemed transshipped. This has left many major retailers and apparel companies uncertain about how imports that include materials from countries like China will be classified. The confusion stems from how “transshipment” will be defined and enforced, causing concerns about potential customs complications and increased supply chain costs.

Vietnam, once a go-to manufacturing hub due to lower costs and fewer restrictions than China, now faces competitive pressure under the new tariff regime. While the 20% rate is less severe than expected, companies heavily reliant on Vietnamese factories may need to re-evaluate sourcing strategies. Nevertheless, with limited alternatives to replace Vietnam’s production capacity, a full supply chain shift remains challenging.