Vietnam’s Garment & Textile Industry 2025: Resilient Growth Amid Tariff Turbulence and Strategic Repositioning

In the first half of 2025, Vietnam’s garment and textile industry, long a cornerstone of the nation’s export-driven economy, is once again making headlines. With double-digit growth in exports and robust foreign investment, the sector is thriving even as it faces rising global uncertainties. Most notably, Vietnam is contending with a new round of tariffs from the Trump administration in the U.S., while beginning crucial trade negotiations aimed at de-escalation and mutual economic benefit.

As global supply chains shift and trade tensions rise, Vietnam finds itself at a crossroads—benefiting from diversification away from China while being exposed to geopolitical risks that could reshape its largest export market.

Double-Digit Export Growth Signals Recovery

In the first four months of 2025, Vietnam’s garment and textile exports reached USD 11.76 billion, reflecting a 12.8% increase compared to the same period in 2024. According to Vietnam Customs, April 2025 alone generated USD 3.07 billion, representing a 17.7% year-over-year increase.

Order stability has been a key factor, with many Vietnamese manufacturers securing contracts through Q2/2025 and entering negotiations for Q3. This momentum suggests the industry is regaining its footing after global demand fluctuations in 2023 and early 2024.

U.S. Market: Growth Amid Tariff Pressures

The United States remains Vietnam’s largest export destination, accounting for 43.9% of total textile and garment exports. Exports to the U.S. totaled USD 5.16 billion in the first four months of 2025, up 17.2% year-over-year.

Yet this critical market is now shadowed by new U.S. tariffs. In March 2025, the Trump administration imposed up to 25% duties on select apparel categories from Vietnam, citing national security and reshoring priorities. While Vietnam was not the central target, it is increasingly viewed as a transshipment risk due to its deep integration with Chinese raw material supply chains.

In response, Vietnam swiftly launched diplomatic engagement. Bilateral talks between USTR officials and Vietnam's Ministry of Industry and Trade have begun, focusing on:

• Enhancing traceability and customs transparency
• Increasing U.S. cotton imports to balance trade flows
• Strengthening labor and environmental standards in line with ILO commitments

Vietnam hopes to avoid full implementation of tariffs through a combination of compliance assurance and goodwill gestures.

Diversification and Market Expansion

To reduce dependence on any single market, Vietnam is pursuing strategic diversification. According to the Vietnam Textile and Apparel Association (VITAS), exporters are:

• Expanding to Halal markets in Southeast Asia and the Middle East
• Entering South American economies to leverage new trade preferences
• Deepening ties with CPTPP partners and actively utilizing the EVFTA and RCEP

Vietnam is also pushing to fast-track an ASEAN–Canada FTA or consider a bilateral Vietnam–Canada agreement to reduce the current three-stage origin requirement under CPTPP to a more manageable two-stage rule.

Vietnamese embassies abroad are playing an active role, offering:

• Market demand intelligence
• Trade matchmaking
• Investment promotion services

This holistic approach is helping exporters discover new buyers, comply with standards, and tap into emerging demand.

Export Markets Overview (Jan–Apr 2025)

Top 10 Vietnamese Garment Exporters (Q1 2025)

Industry Investment and Innovation

Despite external pressures, investor confidence remains strong. FDI in the sector exceeded USD 610 million in the first four months of 2025. Investment is concentrated in:

• Functional fabrics and technical textiles
• Eco-friendly dyeing and recycling technology
• Smart production systems using AI and automation

Vietnam is evolving from low-cost manufacturing to value-added, sustainable production, aligned with ESG expectations from major international buyers.

Industry Challenges

While momentum is strong, the industry faces several critical challenges:

• Input dependency: Over 60% of materials are still imported, mainly from China
• Yarn market instability: Falling cotton prices and soft demand are squeezing margins
• Labor shortages: Talent is shifting to tech and service sectors
• Compliance costs: ESG, carbon accounting, and traceability standards are tightening

Manufacturers are adopting leaner inventory models and focusing on speed-to-market, reshoring some inputs and consolidating production.

Outlook: Path to USD 52 Billion

Vietnam’s garment and textile exports are on track to reach USD 50–52 billion in 2025. But this forecast is contingent upon:

• A constructive outcome from U.S.–Vietnam trade talks
• Effective utilization of FTA market access
• Continued investment in green production and supply chain localization

As the global fashion industry pivots toward resilience, traceability, and ethical sourcing, Vietnam is well-positioned to become a regional leader in sustainable apparel manufacturing.

Conclusion

Vietnam’s garment and textile industry enters 2025 not just with growth, but with strategic clarity. While geopolitical headwinds may shake markets, the sector’s diversified exports, diplomatic agility, and modernized production model provide a solid foundation for enduring success. The world’s brands may be looking to Vietnam for fast fashion, but what they’re increasingly getting is a reliable, ethical, and forward-looking partner.

By Alice LE

Vanguard Business Information LLC