It’s been several weeks since US President Donald Trump declared his global trade war, but Dinh Ngoc Hien is still busy tending to her stream of customers. One by one, they pluck cigarettes, noodles, eggs and soda from the shelves of her convenience store in Dong Nai, a heavily industrialized province just east of Ho Chi Minh City, Vietnam’s business capital. Hien has been here since dawn, and she’ll remain after dusk. Then she’ll lock up, get on her motorbike and zip through the bustling streets of a place that could have more to lose from Trump’s policies than almost any other.

The president’s “Liberation Day” tariffs, unveiled on April 2, targeted Vietnam with a 46% rate—one of the highest for any country, threatening to devastate large swaths of its economy. The nominally socialist nation of 100 million has woven itself tightly into global commerce since the late 1980s, when it began allowing free enterprise and started mending its war-ravaged relationship with the US. Adidas, Apple, Intel, Levi Strauss and Samsung Electronics have all set up manufacturing bases here, along with hundreds of other international companies. Today, net exports to the US account for around one fifth of Vietnam’s gross domestic product.

A Crucial Trade

Vietnam’s annual GDP

While the tariffs have been put on hold until July and are the subject of multiple court challenges, the fear they’ve caused across Vietnam continues—especially in Dong Nai. When the 34-year-old Hien was a child, the Delaware-size province was a place of open fields and rice paddies, where farmers toiled much as they had for centuries. Now its western flank is an urban extension of Ho Chi Minh City, a sprawl of highways and industrial sites girded by commercial strips where workers can spend their extra cash. Most of Hien’s customers have jobs in nearby factories; so do her husband and her sisters and their spouses. “All these changes are good,” she says. “Our lives are much better now. We live in bigger houses, and everyone in the family has a motorbike.” With business brisk, she has plans to expand: “I want to see myself grow into a real entrepreneur.”

Hien’s ambitions, and those of millions of her compatriots, will hinge in part on what happens in the coming weeks. The Vietnamese government has dispatched several delegations to Washington and pledged to remove what the country’s trade minister described as “barriers that hinder investment and business activities.” It’s promised to eliminate illegal transshipments, whereby Chinese companies evade import controls by sending their wares to Hanoi or Ho Chi Minh City and designating them as “Made in Vietnam”; Trump’s trade negotiators describe this as a major problem. US Treasury Secretary Scott Bessent has also suggested that deals with Vietnam and other Asian countries could require them to impose economic measures of their own against China, a crucial Vietnamese trading partner.

And in addition to those potential concessions, Vietnam has offered something that might be more impressive to a president who’s openly using the office for personal profit: facilitating the development of a Trump-branded golf resort that went from proposal to construction in a matter of months. The White House has said that Trump complies with conflict-of-interest rules; the Trump Organization, his family real-estate company, said in a statement that its Vietnam deals were signed before last year’s election, and that the firm has “zero connection to the administration.” Its local partner, Kinh Bac City Development Holding Corp., did not respond to a request for comment.

Still, it’s not clear whether any of this will be enough to change Trump’s plans. The UK recently reached an accord with the White House that exempted its steel industry from US tariffs and reduced the levies on a limited number of British-made cars—but that left unchanged the 10% rate on most other products announced in April. Moreover, even traditional US allies have learned that an agreement with Trump can be abrogated in the time it takes him to post to Truth Social, and for almost any reason.

The tariff assault has been particularly stunning for Vietnam, given its unique history with the US. American bombing devastated large parts of the country in the 1960s and ’70s, contributing to the deaths of as many as 3 million Vietnamese—at least half of them civilians. More than 58,000 Americans were also killed in the conflict. The normalization of relations, 20 years after the end of hostilities, marked an extraordinary historical pivot. The two countries soon grew closer, partly thanks to US policymakers encouraging companies to “friendshore” their production away from China.

Both Republican and Democratic presidents nurtured the relationship, which has extended in recent years to include some security cooperation. So did successive Vietnamese leaders, despite the lingering effects of the war: Undetonated bombs continue to kill people each year, and the descendants of those exposed to Agent Orange, a toxic defoliant, suffer abnormal rates of cancer and birth defects. Trump’s tariff announcement, then, wasn’t just another policy decision. It was a direct strike on decades of political and economic rapprochement, delivered with the stroke of a pen.

If Trump drives the countries apart, “it will be bad for the US, and worse for Vietnam,” warns Stefan Selig, who served as undersecretary of commerce for international trade during the Obama administration. “The US consumer is going to lose. US strategic interests are undermined. And, most unfortunately, the Vietnamese—trying to pull themselves up from poor to middle class—are going to lose. It’s heartbreaking, frankly.”

Amid Dong Nai’s industrial zones and the remaining patches of countryside between them, you can find a pair of contrasting symbols of Vietnam’s painful past and its hopeful future. The first is the Bien Hoa airfield, which served as a base for the French and US militaries in their 20th century wars against Vietnamese communists. The second is a vast new airport under construction in the district of Long Thanh, intended to become the country’s new gateway to the world when it opens next year. Separated by just 20 miles, the two sites reflect a remarkable historical arc.

The US withdrew its last combat forces from South Vietnam in 1973. Ho Chi Minh City, then known as Saigon, fell to the North Vietnamese two years later; one year after that, the two states were officially unified under the control of the Communist Party. A decade of severe poverty and international isolation followed. Then, in the mid-1980s, a reform-minded leader named Nguyen Van Linh began to relax government control of the economy. Linh framed his approach as a step toward constructing a Marxist utopia. As he reportedly put it, “We want to reach socialism, but we want to go by airplane, not by bicycle.”

As in China, this transformation didn’t entail loosening political control, and Vietnam remained a one-party state, with no effective opposition and sweeping restrictions on the media and civil society. That climate, combined with economic liberalization, also provided irresistible opportunities for corruption: A recent crackdown on graft ensnared two former presidents and hundreds of other officials and businesspeople—including a real estate tycoon who received a death sentence.

But in material terms, there’s no question the policies Linh set in motion have made life better for millions. The catalyst was international capital. One of the first foreign-operated facilities, set up in the early 1990s by a Taiwanese company, was a motorcycle assembly plant not far from the gates of Bien Hoa. The US lifted its postwar trade embargo in 1994, a development encouraged by two influential veterans of the conflict, Senators John Kerry and John McCain. Gradually the trickle of investment became a flood. In addition to inexpensive labor, Vietnam offered a young, educated workforce and political stability, a byproduct of the Communist Party’s iron grip on power.

From Fields to Factories

Trans-Pacific trade has transformed Vietnam’s Dong Nai province

For many international companies, Dong Nai was the first stop: Cargill opened a factory there in the mid-’90s and was soon followed by the likes of Suzuki Motor, Fujitsu and Formosa Plastics. Of the more than $600 billion of foreign investment Vietnam has attracted since 1988, some $36 billion has gone to the province. Much of it has been deployed in industrial parks—gated zones with dedicated infrastructure and tax incentives for corporate tenants.

Products from Dong Nai are in millions of US homes and workplaces, with more arriving every day. They include apparel from Lululemon Athletica; coffee pods from Nestlé; engine parts sold by Robert Bosch; and T-shirts from Fast Retailing’s Uniqlo. Nike Inc. began manufacturing in Vietnam in 1995, starting a gradual displacement of China as its most important manufacturing hub. Now half of its shoes and a quarter of its clothes are made in Vietnam, and its supplier network employs roughly 170,000 people in Dong Nai.

Nguyen Thuy Huong’s garment factory, in a northern district of the province, is typical of the kind of business that has thrived thanks to trade with the US. Huong began her career at a small state-owned textile company in 1998. When the government tried to speed up privatization efforts a decade later, she and some colleagues bought a majority stake in the firm. By 2015 she was ready to open her own factory, where she now employs about 100 full-time workers who sew shirts and sportswear under harsh fluorescent lights. About half of her output goes to the US, some of it to Walmart stores.

Like many Vietnamese entrepreneurs, Huong operates on tight margins, and even modest tariffs could seriously hurt her business. As a result, she’s been scrambling to book as much revenue as possible before higher levies kick in. “We’re moving fast to ramp up production and get shipments out during this 90-day pause,” she says. She’s trying to add staff and has considered shipping some products to the US by air, which costs three times more than by sea, just to fill orders while she still has them. Because of Trump’s constant policy reversals, planning beyond the 90-day window is difficult, both for her and her US customers. “We’ve already started seeing a slowdown for next season,” she says, “probably because buyers are waiting to see how things play out.”

Trump presented his “Liberation Day” plans with the flourish of the reality-TV host he once was, unveiling each country’s tariff rate during an event in the White House Rose Garden. When he saw them, Ted Osius, the chief executive officer of the US-Asean Business Council, was stunned. Vietnam’s 46% was almost double the rate for Japan and India and more than four times higher than the 10% planned for the UK and Australia. (Most of Vietnam’s peers in the 10-country Association of Southeast Asian Nations fared only somewhat better, with Indonesia getting a 32% rate and Malaysia 24%.)

During the weeks leading up to the announcement, Osius—who served as the US ambassador to Vietnam from 2014 to 2017—asked the White House what it would take for To Lam, the general secretary of the Communist Party and thus Vietnam’s top political leader, to get a meeting with Trump. “Big deals” with American companies, he recalls being told. Osius says Vietnamese officials told him in response that big deals were possible. At the time, Vietnam taxed most US imports at 15% or less. In late March, it reduced the rates on a range of products, including apples, cars and liquefied natural gas, and also announced $4 billion in purchases from US companies. “I knew the Vietnamese were very uneasy and hoping their preemptive actions would lessen the blow,” Osius says. “They had made a decision, collectively, to help US businesses. … That’s why I was so dismayed.”

For the administration staffers who determined the rates, it was a matter of simple math. The tariff levels were calculated according to a crude formula based on each country’s trade balance with the US. Trump has repeatedly claimed that the US “subsidizes” nations that export more to the American market than they buy in American goods, an understanding at odds with basic economics and common sense. (The equivalent, on an individual level, would be to characterize a shopper’s purchases from a supermarket as subsidies to its owners rather than exchanges of money for useful products.)

However Trump arrived at it, his eccentric understanding of global trade flows put Vietnam in a difficult position, because the country is an export powerhouse but has a per capita GDP of only about $4,000, meaning its citizens can’t afford expensive imports. The result is that the US has a large trade deficit with Vietnam. It stood at $123.5 billion last year, behind only those with China and Mexico. In theory, tariffs could close the gap by making Vietnamese goods more costly, encouraging companies to move production to places like Ohio or Arizona. But this presumes, among other things, that American workers would want jobs sewing sneakers or soldering circuit boards and that paying them prevailing US wages wouldn’t make the products prohibitively expensive.

What Osius and other Vietnam experts found especially bewildering was that American policy had helped create that large deficit. During his first term, Trump imposed tariffs on a wide range of Chinese goods, including rice, handbags and medical devices. To avoid those measures, which President Joe Biden largely left in place, and to reduce the risks of relying on a country US politicians view as a strategic rival, many global companies shifted production southward. Examples included homeware retailer Williams-Sonoma Inc., which moved a significant portion of its manufacturing from China to Vietnam, and toymaker Hasbro Inc., which started making more of its Transformers toys there. Other new factories were much higher-tech: Foxconn, the Taiwanese company behind many of Apple Inc.’s bestselling devices, set up Vietnamese production lines for some iPads and MacBooks. Since 2017, Vietnam’s exports to the US have roughly tripled, with the trade deficit growing apace.

Some officials in the first Trump administration encouraged this transfer of industrial production from China, while to others it provided more evidence that, without additional measures, companies would never revive manufacturing in the high-cost US. Trump’s attitude was characteristically mercurial, mixing condemnations (“Vietnam takes advantage of us even worse than China”) with embraces (“Vietnam has truly become one of the great miracles of the world”). Trump ultimately imposed tariffs on a relatively marginal selection of Vietnamese goods before losing the White House to Biden.

This time the Vietnamese government swiftly sprang into action. Lam was one of the first global leaders to speak to Trump after the tariff announcements, and on April 5 he made a public offer to drop all of Vietnam’s remaining levies on US goods and show “goodwill in other areas.” His deputy prime minister was soon en route to Washington for a series of meetings. Statements by the Vietnamese government suggest that it might offer to increase spending on US aerospace products, food and energy. It might also commit to concrete action against the relabeling of Chinese goods. (The national customs agency says it has uncovered multiple cases of the practice, though it’s hard to determine how common it is.) The hope is that such concessions, delivered in a flattering pronouncement, might persuade Trump to at least bring tariffs on Vietnam in line with other countries, if not cancel them outright.

Virtually all of the Vietnamese businesspeople to whom Bloomberg Businessweek spoke for this story say they’re optimistic the government can find common ground with the US, and in public, officials are urging calm. “Vietnam will increase dialogue and negotiation, not confront, cause tension or complicate the issue,” Prime Minister Pham Minh Chinh said in April. He noted that while the tariffs will affect the world economy, they won’t be nearly as painful for the country as its economic reforms in the 1980s, let alone the wars that preceded them.

On the edge of one of Dong Nai’s industrial zones, several rows of condominium buildings, designed in a vaguely French style, sit along newly laid streets. In a nearby coffee shop, a lone customer is hunched over his laptop. Ho Van Huy is a salesman for the developer of this new neighborhood, dubbed STC Long Thanh. Once completed, it’s intended to be an oasis of middle-class comfort, with its own schools, playgrounds and hospital, as well as a park with an artificial lake.

No one has yet moved in, but more than four-fifths of the 1,083 units have been sold. “This project and this area have great potential for growth,” Huy says. He points to the road in front of the development, noting plans to triple its width to accommodate an ever-growing number of motorbikes, trucks and late-model sedans. Asked about the impact of proposed tariffs, Huy says that while they’ve made companies more cautious, anyone planning to invest in the area thinks long term.

Projects like Huy’s represent a bet that, ultimately, Vietnam’s economic rise can’t be arrested by decisions in any foreign capital. The buyers of STC’s condo units, which start at about $120,000, are obviously consumers themselves, with the cash to afford much of what Dong Nai’s factories crank out. If government plans are realized, over time more of them will work in research and development, design and other better-paid jobs, just as Chinese companies have shifted from basic manufacturing to more valuable innovation. The result will be an economy less reliant on shipping cheap goods to wealthier places and more driven by services and its own internal demand. In Dong Nai, the priorities are “green technology, electronics and semiconductor manufacturing,” says Duong Minh Dung, a senior provincial official. While factories making simpler products are of course welcome, “we’re now focusing on high-tech industries,” he says.

Another element of this strategy can be found a short drive from the STC development, where weather-beaten plastic tape marks the perimeter of Long Thanh International Airport. Inside, down a dirt road, lies a construction site almost the size of Manhattan. Several large cranes operate overhead, hoisting steel for an ultramodern terminal building designed to resemble a lotus, Vietnam’s national flower. When flights begin next year, the airport will have an annual capacity of 25 million passengers—a relatively modest figure at first, but plans call for three additional terminals. That would quadruple its size and put it in the same league as Dubai and London Heathrow—large enough to serve a metropolis that’s projected to be home to almost 15 million people by 2050, taking its place as a major Asian center of technology, finance and professional services. It’s a bold set of aspirations, but not a ridiculous one. Over the past 50 years, Vietnam moved from brutal civil conflict to lasting peace, from poor to middle income, and from Stalinist central planning to free markets. In the process, its economy expanded by well over 1,000%.

To keep the growth going and eventually allow Vietnam to become a wealthy society, its leaders have some difficult decisions to make. Its largest trading partner is China, not the US—a two-way relationship worth more than $200 billion last year. Chinese President Xi Jinping made a state visit to Hanoi in mid-April. Lam welcomed him warmly, vowing that “developing ties with China is a strategic choice and a top priority.” (Trump, for his part, said the meeting was for “trying to figure out, ‘How do we screw the United States of America?’”) Yet swapping dependence on one superpower for another is an unappealing prospect. Vietnam has a fraught relationship with its giant neighbor, with which it fought a brief, bloody war in 1979. More recently, the two countries have clashed over Beijing’s sweeping maritime claims, and anti-China sentiment is common among ordinary Vietnamese. Renewed tensions are always a possibility, with consequent risks to trade. Keeping large-scale exports to the US going is therefore critical.

After three days of discussions in late May, Vietnamese officials said they’d made progress with their US counterparts on a deal to head off the crippling 46% tariff. More meetings will follow this month. The best Vietnam can hope for in the short term might be provisional concessions—subject to more detailed negotiation and, of course, to Trump’s personal and political whims. With such an agreement, exports could continue, albeit with enough surrounding uncertainty to make it difficult to run a modest factory, let alone plan the future of a fast-emerging market.

Vietnam has, however, already sealed a deal with Trump’s family—and it could count as much as anything that happens at the negotiating table. The Trump Organization currently has no properties in the country. That will soon change. On May 21, hundreds of dignitaries assembled in a field by the banks of the Red River, not far from Hanoi, and filed into a gold-colored tent decorated with fake pink lotus flowers. Across the road, a small group of local farmers had also gathered, security guards preventing them from getting any closer.

They were hoping for a glimpse of the guest of honor, Trump’s son Eric, who’d come to mark the groundbreaking of a $1.5 billion, 54-hole golf resort, the Trump International Hung Yen. After a traditional Vietnamese dance performance, Prime Minister Chinh took the podium, hailing US-Vietnamese cooperation and urging bureaucrats to ensure the development is built on schedule. In his own speech, Eric said it was only the beginning of the family’s plans for Vietnam: “This project and many of the other ones that we do together are going to be the envy of all of Asia. They’re going to be the envy of the entire world.” The next day he flew to Ho Chi Minh City for meetings with the local government about a potential new Trump Tower.