In a rooftop bar not far from where the U.S. airlifted its allies from Saigon at the end of the Vietnam War, Steve Neumeyer was excited to strike a deal.
The 64-year-old from Sheboygan Falls, Wis., has built a career sourcing lawn-mower parts, all-terrain-vehicle components and pickleball equipment for American manufacturers. This month, Neumeyer’s quest to find a supplier for $150,000 worth of plastic parts for a hydroponic plant-growing company had taken him to Vietnam.
But he didn’t know whether buying the plastic tanks would still make sense whenever the dust settles in President Trump’s trade war.
Peter Navarro, Trump’s trade adviser, has called Vietnam a “colony of Communist China” and accused it of helping Chinese producers “cheat” their way into the U.S. market. The president, who slapped Vietnam with a 46% “reciprocal tariff” before pausing it for 90 days, mused that a meeting between Chinese leader Xi Jinping and his Vietnamese counterpart, To Lam, aimed to “screw the United States of America.”
Neumeyer just wanted to do business here. Sipping a beer at the end of a day touring manufacturing plants on the outskirts of Ho Chi Minh City, the bustling megacity formerly known as Saigon, Neumeyer could see the opportunities Vietnam presented. On modern factory floors, he had watched workers churn out pet toys and tires for less than $2 an hour. Behind him, the skyline glittered with new glass-and-steel high-rises.
“I was pretty impressed today,” Neumeyer said.
Strained friendship
Fifty years after the end of the war, Vietnam supplies one-third of the shoes, one-fourth of the furniture and one-fifth of the clothes imported by the U.S. By some metrics, no other country benefited more from the tariffs Trump imposed against China during his first term, which sent U.S. buyers scrambling for other options and set off a once-in-a-generation economic boom in the Southeast Asian nation.
A CIA employee helps Vietnamese evacuees onto a helicopter in a defining image from the 1975 fall of Saigon.
Rice paddies gave way to factories churning out goods for American brands including Apple, Gap and Crocs. New roads, ports and rail projects sprang up in the country, whose young, 100-million-strong population and low wages offered an attractive alternative to its bigger northern neighbor.
Washington and Hanoi became closer, too. U.S. aircraft carriers have docked in Vietnamese ports and, in 2023, the two former adversaries forged a “comprehensive strategic partnership,” the same level of diplomatic relations Hanoi maintains with Beijing.
Trump’s trade war has thrown those advances into doubt. At $123 billion last year, Vietnam has the third-largest trade surplus with the U.S., trailing only China and Mexico.
Some Trump allies see Vietnam as little more than an extension of the Chinese factory floor that the administration appears intent on shutting out of the U.S. market. The White House now plans to use tariff negotiations to pressure U.S. trading partners to isolate Beijing—for instance, by preventing Chinese companies from locating in or shipping goods through their territories.
Such demands could force Vietnam’s Communist leaders to pick between their largest and most lucrative export market—the U.S.—and China, their biggest overall trading partner and the superpower next door. It would be difficult for Vietnam to take Washington’s side against Beijing.
Entities based in mainland China and Hong Kong have invested more than 10 times as much in Vietnam as U.S. businesses have since Trump’s first term, highlighting the grip China maintains on Vietnamese production. Many factories with owners from other countries, including South Korea and Japan, depend on Chinese components.
Even if the U.S. and Vietnam reach a deal that prevents the imposition of the full 46% tariffs, Vietnam could still wind up with higher duties than some of its developing-country competitors.
“There’s definitely a panic in the air,” said Joe Jurken, another Wisconsinite whose supply-chain consulting firm, the ABC Group, is helping Neumeyer find factories in Asia.
Success story
The foundations for Vietnam’s success were laid in the late 1980s, when a collapsing Soviet Union stopped propping up the country’s centrally planned economy. Faced with 700% inflation and unable to produce enough to feed its people, Vietnam opened the gates to foreign investors, offering tax cuts and free land to build factories.
In 1994, President Bill Clinton lifted the U.S. trade embargo against Vietnam, a final step toward normalizing relations. Exports to the U.S. accelerated about 15 years ago when big American companies, including Nike, realized that wages for workers sewing shoes and other apparel were lower than in China.
Former President Bill Clinton, shown on a 2006 visit to Hanoi, played a key role in establishing the U.S.’s trade relationship with Vietnam.
That shift went into overdrive after 2018, when Trump first targeted Chinese products with tariffs. Chinese manufacturers, their American buyers and other international companies exporting to the U.S. began looking for ways to escape the levies.
Vietnam stood out. Chinese-made components and raw materials could travel quickly from industrial hubs like Shenzhen and Guangzhou to assembling plants that proliferated in Vietnam’s north. A sprawling new port terminal in Haiphong became a regular stop for containerships plying Pacific trade routes. Later this year, construction will begin on a new rail line connecting Haiphong with the Vietnam-China border.
Between 2018 and 2024, the value of goods Vietnam exported to the U.S. more than tripled. Moving up almost in lockstep were Vietnam’s imports from China.
The boom was a win for everyone, including American consumers who wanted cheap goods and the many Vietnamese workers who got factory jobs.
Flags hang in Ho Chi Minh City to mark the 50th anniversary of the city’s capture.
One of those workers, Do Thi Hang, grew up in a one-room house in Haiphong before studying accounting in Japan. Now 34 years old, she manages a warehouse at Polarium, a Swedish-based lithium-battery company where she earns about $6,000 a year.
Together with her husband, who earns less, Do built a three-story house for about $40,000. She saves money, sends her two daughters to dance class and owns an iPhone full of photos of family vacations. Another sign of her upward mobility is her smile flashing new metal braces, which cost $1,400.
“Previously, we didn’t have money for these luxuries,” she said.
Seeking deals
It was this economic promise that Neumeyer wanted a piece of.
Growing up on a farm in Wisconsin, he had cousins who served in the Vietnam War but didn’t talk much about their time there. For a long time, Neumeyer knew only that Vietnam was an American military adversary.
Then, after he had built a career out of finding factories in China, his pursuit of cheaper suppliers took him to a wooden-furniture maker in Vietnam in 2004.
Despite being a bit nervous, he said his fears vanished soon after stepping off the plane. “People here were just terrific to Americans,” he said.
He didn’t strike any deals back then. But on his latest trip, he was blown away by the country’s development, and he was optimistic he could do business there.
Neumeyer’s company, NeuQuality, is a middleman. Neumeyer’s clients ask him to find components, such as two pieces of metal that need to be welded together for a tractor, and he and four Wisconsin-based employees find a low-cost, reliable source in Asia.
The company, which has under $25 million a year in sales, handles business relationships with factory owners and imports the products.
Early one day during his recent visit, Neumeyer sat in a van jostling with rush-hour mopeds as it inched out of central Ho Chi Minh City. The destination: a plastics factory that makes dog and cat toys sold at Walmart. Neumeyer wanted to see whether it could also manufacture tanks for his client, a hydroponic-plant company looking to find an alternative to its current supplier in the American Midwest.
Supply-chain consultant Joe Jurken, wearing a blue shirt, joins Neumeyer on a factory visit.Toys for pets sit among other plastic products on display at the factory.
Touring the factory, Neumeyer picked up nearly finished pet toys, inspected machines and examined quality-control records. He tested morale by making eye contact with workers to see whether they returned his smile, which they did.
Afterward, Neumeyer gave the manager a preview of what he would tell his client.
“I’m going to go back to them and say, ‘I have a factory that’s capable,’” Neumeyer said.
His second stop was a Taiwanese-owned factory that made tires for all-terrain vehicles. Machines overseen by Vietnamese workers pressed Chinese rubber into tires that Neumeyer hoped would interest a potential client.
“Can you get the raw materials from [somewhere] other than China?” Neumeyer asked the factory’s business manager.
With new tariffs on China, Neumeyer worried, scrutiny of the origin of American imports was likely to tighten. Last week, the U.S. imposed punitive tariffs against several Chinese solar-panel makers in Vietnam, following complaints that Chinese state subsidies helped them dump products in the U.S.
Low labor costs have made Vietnamese manufacturing an attractive alternative to China.Neumeyer, expecting tighter U.S. import controls, sees risk in products that include Chinese materials.
“I’m concerned about somebody knocking on my door and saying, ‘You’ve been lying to the government,’” Neumeyer said. The factory’s business manager said he would look into finding other rubber suppliers but that China’s was the cheapest and best.
Neumeyer said his potential client would find the price appealing, assuming any eventual tariffs on Vietnam were lower than those collected on imports from China.
Uncertainty reigns
Neumeyer left Vietnam the next day. Now back in Wisconsin with about 10 weeks left in Trump’s 90-day pause in tariff implementation, Neumeyer’s optimism was tempered by uncertainty. His clients haven’t committed to ordering from Vietnam yet as they wait to see whether Trump keeps the original 46% tariff rate.
“I’m kind of in a position of waiting and seeing for another month or two or three,” he said.
He said he wished tariffs didn’t complicate his business, but he understands the world has changed.
“Ever since 2018, I’ve been thinking about it,” he said. “It’s called business. It’s not called fun, right?”
Neumeyer and Jurken talk over drinks in Ho Chi Minh City.
Write to Stu Woo at Stu.Woo@wsj.com and Gabriele Steinhauser at Gabriele.Steinhauser@wsj.com