As Vietnam and the United States approach the 30th anniversary of diplomatic normalization (1995 – 2025), the US Ambassador to Vietnam Marc Knapper remarked:
“We’ve been together for 30 years thanks to our commitment to reconciliation and our mutual respect. And we’ll be together for the next 30. Our prosperity and security are shared. We are essential partners.”
US Ambassador to Vietnam Marc Knapper and US Consul General in Ho Chi Minh City Susan Burns. Source: Department of Grassroots and External Information Ministry of Culture, Sports and Tourism.
Ambassador Knapper’s words echo the spirit of progress and partnership; it’s worth exploring what that truly means for businesses on both sides. Let’s unravel how this growing US-Vietnam relationship is creating real opportunities for mutual growth in the decades ahead.
Key milestones in US-Vietnam trade and diplomatic relations (1994-2025)
Chronology of the U.S. – Vietnam Relations. Source: U.S. Embassy & Consulate in Vietnam
After years of tension following the Vietnam War, the U.S. and Vietnam slowly rebuilt trust in the 1990s, leading to renewed trade and diplomatic ties.
Steps toward normalization began in the early 1990s under President Clinton. In 1994, the U.S. lifted its trade embargo, and by 1995, the two countries restored full diplomatic relations. This phased approach to normalization, from lifting the embargo to establishing diplomatic relations, reflects a cautious, incremental process designed to build trust and encourage Vietnam’s market reforms.
The US–Vietnam Bilateral Trade Agreement (BTA) in 2001 and Vietnam’s WTO accession in 2007 were game-changers that opened up trade, slashed US tariffs on Vietnamese goods, and pushed Vietnam to reform its economy.
- Under the BTA, the US immediately granted Vietnam conditional Most Favored Nation (MFN) status, also known as Normal Trade Relations (NTR), which dramatically reduced US tariffs on most imports from Vietnam from an average of 40% to less than 3%.
- Vietnam committed to reforming its trade and investment regime by opening services markets (like financial services, telecommunications, and distribution), protecting US investments, eliminating local content and export requirements, phasing out investment licensing, and adopting a transparent legal framework, all to create a fair and predictable environment for US businesses.
Explosive Surge in Bilateral Trade Volume
The BTA, diplomatic normalization, and Vietnam’s market reforms led to a remarkable surge in bilateral trade, growing from just US$451 million. This consistent and resilient growth shows the depth of the US–Vietnam trade relationship, with the US becoming Vietnam’s largest export market and second-largest trading partner.
Vietnam’s exports to the US (1995 – 2024) (Billion USD). Source: General Department of Vietnam Customs
Vietnam’s trade with the US has evolved from simple exports like textiles and footwear to a broader mix of processed goods, high-value agriculture, and increasingly high-tech products—reflecting its industrial upgrading.
In return, Vietnam imports high-tech inputs, high-value goods, and production inputs from the US. Key US exports to Vietnam include electronics, machinery, cotton, soybeans, chemicals, animal feed, and integrated circuits. This complementary trade structure reinforces Vietnam’s role as a key manufacturing hub and strengthens the resilience of the bilateral economic partnership.
Vietnam’s exports categories to the U.S. (2024). Source: General Department of Vietnam Customs
The upgrade of US – Vietnam relations to a Comprehensive Strategic Partnership in September 2023 reflects deeper mutual trust and broader cooperation beyond trade, aligning with the US’s “pivot to Asia” strategy.
Foreign Direct Investment (FDI): A Cornerstone of Collaboration
Rising US investment in Vietnam is largely driven by US-China tensions, making Vietnam a strategic hub for supply chain diversification. Vietnam has successfully attracted substantial volumes of FDI, sustaining levels around US$10-12 billion per year over the past decade.
FDI attraction during January-March in 2019-2025 period (Billion USD). Source: Ministry of Finance
FDI into Vietnam is increasingly concentrated in strategic, high-tech sectors and critical infrastructure. In 2024, manufacturing and processing led with US$ 25.58 billion (66.9% of total FDI). Investment is flowing into semiconductors, AI, renewable energy, and microchips, with major US firms like Intel, Apple, Boeing, Nvidia, and Google expanding operations. This trend reflects Vietnam’s deepening integration into global supply chains and its push for industrial upgrading and long-term resilience.
FDI attraction by sectors during January – March 2025. Source: Ministry of Finance
At the same time, Vietnamese outbound direct investment (ODI) is gaining momentum. In 2024, ODI hit US$664.8 million, focusing on tech and manufacturing. A standout example is VinFast’s EV factory in the US, marking a shift toward global production and Vietnam’s ambition to become a global economic player.
Opportunities for Businesses
A. For US businesses: A gateway to Asia through a trusted partner
- Market Access & Tariff Advantages: Vietnam’s commitment to zero tariffs on U.S. agricultural imports — like soybeans, wheat, dairy, and cotton — gives American producers a competitive edge in a market of nearly 100 million people.
- Supply Chain Diversification & Resilience: Vietnam is now a core manufacturing base for major US brands like Nike, Apple, Amkor Technology, Intel.
- Cost Competitiveness: With an average labor cost of US$1.94/hour and strong workforce quality, Vietnam offers unmatched value.
- Government Incentives: Such as tax holidays, foreign tax credits, and priority access to major free trade agreements, including the WTO, ASEAN, CPTPP, and RCEP.
- High-Tech Expansion Opportunities: US firms in semiconductors, AI, clean energy, and digital infrastructure are actively expanding. The joint goal to train 50,000 semiconductor engineers by 2030 is a strategic pillar.
- Clean Energy Cooperation: Firms like AES are deepening investment in LNG and renewables, as Vietnam aims for net-zero emissions by 2050.
B. For Vietnamese businesses: Access to capital, technology, and global branding
- Access to U.S. Capital Markets: Vietnamese companies are gaining increased access to U.S. capital markets, marked by milestone IPOs such as Society Pass – the first Vietnam-based firm to go public on a U.S. exchange in 2021—and VinFast, which debuted on Nasdaq in 2023 with a US$23 billion valuation, becoming the largest Vietnamese company listed in the United States.
- Support from U.S.–Vietnam economic channels: Through trade offices, delegation exchanges, and partner-matching programs, Vietnamese firms are tapping into the world’s largest economy with growing confidence and visibility.
- Collaboration on innovation & green economy: The U.S. is a critical partner in Vietnam’s shift toward high-tech and clean energy. American support for Vietnam’s digital transformation, innovation ecosystem, and climate goals (including the 2050 net-zero pledge) brings both funding and technical know-how to Vietnamese businesses in key sectors.
Conclusion
As the United States and Vietnam celebrate 30 years of diplomatic ties, their partnership is moving beyond symbolism—fueling real economic opportunities in technology, energy, manufacturing, and innovation.
With deepened trust, shared goals, and evolving strategic alignment, the time is ripe for companies on both sides to explore cross-border expansion, co-investment, and long-term collaboration.
At Source of Asia, we help U.S. companies unlock Vietnam’s market potential through tailored go-to-market strategies, local compliance support, supply chain development, and business matching. Likewise, we empower Vietnamese companies to scale globally—especially in the U.S.—through market entry consulting, fundraising support, and cross-border partnerships.
Whether you are an American investor looking for a strategic base in Asia, or a Vietnamese business aiming to expand into the world’s largest economy—Source of Asia is your trusted partner on the ground. Let’s build the next 30 years of success together.
