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Vietnam’s garment exports are expected to increase by nearly 15% this year, new figures show, boosted by the escalating trade spat between the US and China.

Exports are set to reach US$35bn for 2018, representing a rise of 14.8% on last year, an industry official told Reuters. The increase comes as US retailers look to diversify their sourcing in order to keep costs under control amid the ongoing trade dispute.

“We are seeing more and more orders coming in, especially from the United States,” the chairman of the Vietnam Textile & Apparel Association told Reuters.

China is currently engaged in a trade war with the US, which most recently approved a 10% tariff on an additional $200bn worth of goods from China, in a move the US fashion industry says will considerably disrupt the sector’s supply chain. On 1 January 2019, the tariffs will rise to 25%.

China has responded by imposing 5-10% tariffs on $60bn of US goods. Negotiations between the two countries to put an end to the trade war, however, have stalled.

Vietnam’s textile and garment sector saw its exports increase over 17% in the first nine months of the year, recent figures from Vietnam’s Ministry of Industry and Trade show.

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By GlobalData

Textile and garment exports were valued at $22.56bn in the period, representing growth of 17.1% on last year. The main export markets of the Vietnamese textile industry are the US, the EU, Korea, China and the Comprehensive and Progressive Agreement for TPP (CPTPP) – or TPP-11 – countries.

Vietnam is the world’s third largest clothing exporter and has benefited as producers and buyers diversify their supply chains, helped by its low labour costs and industry focus on specialisation, modernisation, and increasing value-add.

According to an overview of Vietnam on the re:source by just-style strategic planning tool, the country stands to gain from duty-free access to the EU market once the EU-Vietnam free trade agreement comes into force, and is widely expected to be one of the biggest beneficiaries of the Comprehensive and Progressive Pacific Partnership (CPTPP) free trade deal. Increased foreign direct investment – particularly in spinning and weaving – has pushed the country into the world’s top ten textile exporters.