Donald Trump recently speculated that Vietnam cutting import tariffs would be a big win for American SUV makers. Whereas the contrast between Vietnam’s narrow streets and large US vehicles has raised eyebrows, there is precedent for such a market, and the idea is not as far-fetched as it at first seems.
When US President Donald Trump announced a deal had been reached that would see tariffs on US goods entering Vietnam reduced to zero, he made a point of highlighting the opportunity for American car makers.
“It is my opinion that the SUV or, as it is sometimes referred to, Large Engine Vehicle, which does so well in the United States, will be a wonderful addition to the various product lines within Vietnam,” he said.
At a glance, this seems somewhat farcical.
Vietnam’s city streets are tiny relative to their US counterparts, with residential neighbourhoods often built on narrow laneways barely big enough for two motorbikes to pass each other, let alone a car of any size.
American SUVs, among the biggest passenger vehicles on the road, in this context, seem very impractical, and expecting a jump in imports seems a stretch.
Recent history and car sales data, however, tell a somewhat different story.
GM Motors, for example, had a production plant in Vietnam for just over 20 years, where it produced a range of vehicles, among them a variety of SUVs.
In 2018, its final year in operation under the GM Motors name, the company reported 12,334 sales, according to data from the Vietnam Automobile Manufacturers’ Association (VAMA).
Of those, 2,045 were SUVs, mostly Trailblazer seven-seaters, which run about 1.9 metres wide.
Moreover, in 2024, of 156,203 vehicles sold by VAMA members collectively, 83,002 units, or 53 percent, were SUVs.
Of those, 10,841 were Ford Everests, which, depending on the model, can be up to 1.92 metres wide, too.
That is to say, there is an argument to be made that for Vietnamese car buyers, size doesn’t really matter.
That said, in 2018, GM Motors did pack up shop and exit its direct operations in the Vietnamese market, amid speculation its sales did not match expectations.
The deal, however, saw its factory sold to nascent Vietnamese car maker, VinFast, with whom it signed a distribution deal for its Chevrolet-branded vehicles — not really a full market exit.
VinFast, however, had intended to import Chevrolet from a GM factory in Thailand, but this closed down in 2020 and by then, the factory in Vietnam had been converted to making VinFast vehicles.
Moreover, sourcing Chevrolet from the US didn’t make a lot of financial sense.
Whereas, vehicles made in Thailand are able to enter Vietnam duty-free as part of the ASEAN Trade in Goods Agreement, cars imported from the US, with which Vietnam did not, and still does not, have a free trade agreement, were, and still are, tariffed based on most favoured nation rates.
For vehicles with a 2 to 2.5-litre engine, like the Chevrolet Trailblazer, when shipped from the US, that’s a 64 percent import tariff, adding a significant additional cost.
This is further compounded by Vietnam’s special consumption tax, which is applied to the price of imported goods after tariffs, and adds an additional 50 percent to vehicles of the Trailblazer’s size.
In this context, if Trump’s announcement proves accurate (and there have been signs in recent days that it may not be), and import tariffs are cut to zero, the difference to the retail price of an imported US-made SUV would be massive.
There are, however, other non-tariff obstacles that US SUV makers may find challenging to overcome.
Firstly, there are still quite a few cheaper, locally made options available that these firms would need to compete with.
Well-known Japanese brands like Mitsubishi, Toyota, and Honda produce and sell thousands of smaller SUVs, better suited to Vietnam’s narrow streets, with a lower price point, every year.
A Ford Everest, for example, which is made in Thailand and so enters Vietnam import tax-free, retails for about VND 1.55 billion or about US$59,354.
Conversely, last year’s best-selling SUV in Vietnam, the Mitsubishi X-Force, retails for less than half of that at VND 705 million or US$26,996.
Moreover, these firms have had a presence in Vietnam for years and have forged strong local relationships and partnerships, as well as developed expansive dealership and service centre networks, and proven their brands to local consumers.
This might make it challenging for new market entrants from the US to gain a foothold.
However, with imported US vehicles sizably more competitive on price, the downside challenges seem much more negligible.
That is to say, it’s unlikely any change will make a significant difference quickly — there likely won’t be shiploads of Canyoneros arriving in the Port of Hai Phong next week — however, that a few more US SUV makers might dip their toes in the market is not that far-fetched.
Moreover, that they might succeed is not totally unreasonable to think either.