Vietnam Beats China and India in US Trade Surplus
· outdoors
The Mouse That Roared: A Tale of Two Trade Strategies
Vietnam’s remarkable transformation from one of Asia’s poorest economies to a manufacturing powerhouse is a story that has captivated the world. Just 50 years after the fall of Saigon, Vietnam has surpassed China and India in its trade surplus with America.
The country’s willingness to adapt and reform its economic policies, coupled with shrewd investments in infrastructure and education, have paid off in a big way. In the 1980s, Vietnam launched its Doi Moi reforms, abandoning Soviet-style central planning and embracing global commerce. This pragmatic approach allowed the country to attract foreign investment, build industrial parks and ports, and cultivate a young and relatively inexpensive workforce.
Two-way trade between Vietnam and the United States has risen dramatically since the mid-1990s. In 1995, it stood at just $451 million; by 2023, this figure had grown to nearly $124 billion. Meanwhile, India’s goods trade surplus with America was a mere $58.4 billion – despite having roughly 14 times Vietnam’s population.
India’s relatively disappointing performance in export-oriented manufacturing and US-bound supply chains is striking. In contrast, Vietnam has managed to transform itself into a major trading partner by embracing global commerce and investing in infrastructure. This lesson is particularly relevant for countries struggling to navigate the complexities of globalization.
Vietnam’s story also serves as a cautionary tale for policymakers who rely on tariffs as a means of protecting domestic industries. The “China plus one” strategy, where multinational corporations adopt Vietnam (and other countries) as their manufacturing hub, has proven more effective than tariffs in addressing America’s manufacturing Achilles’ heel.
The country’s trade surplus with the United States is expected to reach $114 billion by the end of 2026, and its exports are becoming increasingly diversified. This includes machinery, electronics, and appliances – a far cry from the country’s agricultural-based economy just a few decades ago.
India has made impressive strides in embedding itself in manufacturing supply chains, particularly in electronics. Mobile-phone exports have risen sharply, but much work remains to be done, particularly in terms of labor-market rules, regulatory compliance, and infrastructure development.
Vietnam’s story serves as a reminder that economic development is a complex and multifaceted process. By embracing global commerce, investing in education and infrastructure, and being willing to adapt and reform policies, countries can achieve remarkable success. This lesson is more relevant than ever as the world navigates the complexities of trade wars and shifting economic landscapes.
The irony of Vietnam’s success will not be lost on those who recall its tumultuous past with America. The country that once declared war on the United States has produced a sophisticated sequel: survive the war imposed on you, make peace, join the global economy – and eventually export your way to prosperity.
Reader Views
- TTThe Trail Desk · editorial
While Vietnam's remarkable trade surplus with the US is indeed impressive, we should also consider the role of cheap labor and environmental costs in its economic success. The country's willingness to tolerate lax regulations on pollution and worker safety has allowed manufacturers to keep costs low, but at what long-term social and ecological cost? As policymakers around the world look to Vietnam as a model for trade strategy, they would do well to examine these dark underpinnings of its economic miracle.
- JHJess H. · thru-hiker
It's time for policymakers to stop fetishizing Vietnam as a lone success story and examine the broader implications of its trade strategy. The country's economic miracle is rooted in its adaptability, not some unique national trait. Vietnam has successfully attracted foreign investment by offering a relatively low-cost workforce and favorable business environment - something other countries can replicate with reforms. What's concerning is that this 'export-led growth' model comes with significant social costs, including labor exploitation and environmental degradation.
- MTMarko T. · expedition guide
One glaring omission from this article is the impact of Vietnam's labor costs on its trade surplus with the US. While it's true that the country has invested heavily in education and vocational training, its relatively low minimum wage still makes it an attractive destination for sweatshop labor. Companies like Nike and Adidas have long exploited this loophole to maximize profits while keeping costs down. Unless we're willing to confront the darker side of globalization, Vietnam's success will only serve as a template for more exploitation, not a model for sustainable development.