The wood industry seizes opportunities amid changes in the export market

Mr. Do Xuan Lap

How important is the U.S. market to Vietnam's wood industry?

The United States is the most important export market for Vietnam's wood industry. It is forecasted that in 2024, Vietnam’s wood and wood product exports will exceed $16.2 billion, with exports to the U.S. accounting for 56% of the total export turnover, nearly $9 billion, while imports from the U.S. will exceed $230 million. Thus, for the U.S. market alone, Vietnam's wood industry has a trade surplus of about $8.8 billion in wood and wood product trade.

Along with Vietnam, China and Mexico are the three countries with the largest trade surpluses with the United States. However, this market may undergo significant changes in the near future. These changes could arise due to new tax policies that the U.S. government plans to apply to imported goods in the future.

Accordingly, the U.S. government is expected to impose a 60% tariff on all imported goods from China and a 15-20% tariff on goods from other countries. However, if import control and investment from China into Vietnam are not well managed, Vietnam may face negative impacts. Specifically, first, there will be increased competition, as Vietnamese wood products will face direct competition from U.S. domestic products and goods from other countries. Second, Vietnam will face trade risks and may be subject to punitive tariffs due to Chinese goods "disguising" their origin as Vietnamese. Third, with the trade surplus between Vietnam and the U.S. exceeding $100 billion in 2024, Vietnam risks becoming a target for anti-dumping investigations or other restrictive measures.

In addition, the U.S. may also apply new tariffs on goods from Vietnam, including wood products. This will cause difficulties in exports and impact production.

Despite the challenges mentioned above, what benefits will Vietnam’s wood industry gain from the upcoming policy changes?

Although facing many difficulties, the policy changes in the U.S. and globally also present significant opportunities for Vietnam's wood industry. Exports from Vietnam, in general, and the wood industry, in particular, may benefit from the high tariffs the U.S. imposes on goods from China. With high tariffs on China, international businesses are likely to shift their supply chains to neighboring countries, with Vietnam being a potential destination. This not only encourages FDI investment but also opens up export opportunities for Vietnam’s wood industry.

Additionally, U.S. policies promoting infrastructure and industrial development, along with the "green procurement" trend, create opportunities for wood businesses to meet the demand for sustainable building and interior materials. Vietnam is actively boosting the export of high-value-added products such as furniture (which accounted for 41% of export turnover in the first 9 months of 2024), helping to reduce dependence on raw products like wood chips.

What support does the wood industry need in the face of changes in the export market?

In the current context of the wood industry and the potential tax scenarios for markets, including Vietnam, to support the wood industry amid changes in the export market, government agencies need to continue partnering with the industry in providing information on policy warnings, trade barriers, and trade defense measures. They should provide information and support to Vietnamese wood enterprises as they seek investment opportunities in the U.S. market. This includes organizing seminars and business networking events between the two countries to encourage investment in both forms; at the same time, it is crucial to promote and introduce Vietnam's sustainable, legal wood industry to partners.

Additionally, associations have suggested that government agencies implement open investment policies while still effectively managing foreign investment projects in the wood industry. Currently, associations and wood businesses are proactively taking steps to mitigate the impacts, such as ensuring supply chains meet U.S. requirements, preparing contingency plans for 2025 if the U.S. imposes tariffs or trade defense measures, promoting Vietnam’s wood products at domestic and international trade fairs, exploring opportunities to open a distribution network for wood products in the U.S, enhancing cooperation with partners, agencies, associations, and suppliers in the U.S, and increasing information sharing with stakeholders. The Vietnam Timber and Forest Products Association will be the focal point for receiving information and sharing it with the wood industry enterprises.

In the future, we can not predict all the potential trade disputes and internal challenges in the wood industry, but the first task for wood businesses is to enhance their market competitiveness and build new markets. Competitiveness means meeting market requirements, such as transparent production, ensuring traceability, and complying with regulations in different countries, while also being able to supply products that meet market demands, with good design and reasonable prices.

Thank you, Mr. Lập!