QUANG NINH, Vietnam — When Le Ngoc Tham became sales manager for a new industrial park in northern Vietnam, the goal was to turn it into an easy alternative for manufacturers leaving China to avoid the tariffs of the first U.S.-Sino trade war.

Three years later, with less than half of the 1,716-acre project completed, dozens of companies interested in leasing the land are having second thoughts. The source of hesitation is Trump’s latest tariffs, which, as announced earlier this month, included a 46% tax on imports from Vietnam, the country’s eighth-largest trading partner.

But even though Trump announced a 90-day temporary stay on the new duties on Wednesday, and the administration said late Friday that it would exclude certain electronics from “reciprocal” tariffs, Vietnam isn’t exactly in the clear.

A 46% tariff rate, which is higher than most other nations, would make Vietnam-made products noncompetitive in the U.S., its largest export market. Both buyers and producers of those goods would likely turn to countries facing lower rates, dragging down industrial activity and foreign investment in Vietnamese manufacturing.

“In the short term, that will be a hit to manufacturers,” said Le, who works for the Amata Corporation, an industrial real estate company based in Thailand. “So the question they ask us is: What are we going to do next?” While the owners of factories that have broken ground here have little recourse, about 40 companies that have inquired about building facilities are hitting pause — one-fifth of which were in the final stages of investment, she said.

Vietnam benefited substantially after Trump imposed tariffs on China in 2018, as companies producing goods for the U.S. there turned to Vietnam. In Quang Ninh province and the neighboring port city of Haiphong, the arrival of high-tech manufacturing, including Apple suppliers Pegatron and Foxconn, contributed to the country’s rapid industrial development and strong economic growth. In 2019, Vietnamese exports to the U.S. surged 35% compared to the previous year.

Now manufacturing accounts for more than one-fifth of Vietnam’s GDP and will be a critical driver in hitting the government’s 8% target rate for 2025. Trump’s protectionist approach to global trade, however, threatens to stymie the boom that powered Vietnam’s economic rise for the last decade.

On April 2, in what Trump dubbed “Liberation Day,” the president announced a sweeping 10% on global imports, in addition to what he called “reciprocal tariffs” that targeted countries with large trade deficits with the U.S. Vietnam was one of the hardest hit nations.

Days after the news, Vietnamese leader To Lam offered to cut its tariffs on American imports to zero if the U.S. did the same. He also asked Trump to delay the taxes by at least 45 days and invited Trump to visit Vietnam.

“If it really gets implemented like this, the impact is dramatic for the economy,” said Matthieu Francois, a partner at Delta West, a Ho Chi Minh City-based advisory firm that helps businesses expand in Vietnam. “This would cancel out the entirety of the growth of Vietnam right now.”

A factory belonging to Jinko Solar, a Chinese company, at Amata Industrial Park in Quang Ninh province, Vietnam.

On Wednesday, the day that tariffs were meant to take effect, Le’s clients still had little idea what to expect.

At Amata’s facilities, where companies make solar panels, electronics and car parts about 120 miles from China’s borders, workers continued to dig trenches around empty lots in preparation for the installation of utilities. Autoliv, a Swedish auto supplier, tested production lines at its new airbag factory slated to open in October.

“We are still monitoring the situation and observing the next stage, to have scenarios to protect ourselves,” Le said. “But we will find a way to live with the tariffs.”

Nearly all the goods manufactured at Amata’s industrial park in Quang Ninh are for export, with as much as 70% of them destined for the U.S.

If Trump goes ahead with the tariffs, Le said Vietnam could try to offset the impact by lowering corporate tax rates further, or offering more incentives for companies that invest in local factories.

Production manager Richard Nguyen at Swedish company Autoliv’s airbag production factory inside Amata Industrial Park, in Quang Ninh province, Vietnam.

China has retaliated against Trump’s tariffs by raising import duties on U.S. goods to 125%. But Vietnam has taken a more conciliatory approach, even before the latest round of tariffs was announced. The country has proposed increasing purchases of liquefied natural gas and airplanes from the U.S. to mitigate the trade imbalance.

The Vietnamese government has also supported construction of a $1.5-billion Trump Organization golf resort about an hour’s drive from Hanoi, and recently approved a trial of the Starlink satellite internet service by Elon Musk’s SpaceX.

“Vietnam is pragmatic and they’re flexible,” said Rich McClellan, a strategic advisor on policy and economic strategy in Vietnam. “They understand the transactional nature of the current administration in the U.S.”

Vietnam’s manufacturing industry began expanding in earnest in the 2000s, as the country’s low-cost, educated working class grew and the government prioritized producing goods for export. Trump’s 2018 tariffs on Chinese imports prompted manufacturers to seek production bases outside of China, many of them favoring Vietnam for its cheap labor and proximity to China. The shift accelerated when the COVID-19 pandemic caused additional disruptions to the global supply chain.

In a sign of strengthening economic and diplomatic ties, the U.S. and Vietnam established a new bilateral agreement in 2023 that pledged to deepen collaboration on policy and trade, including a $2-million investment from the U.S. in Vietnam’s growing semiconductor sector.

But as Vietnamese manufacturing has boomed, so has the nation’s trade surplus with the U.S., rising fourfold since 2015 to $123.5 billion last year. Trump has accused Vietnam of effectively taxing American goods at 90%.

“Vietnam is very clear that the development of their country goes hand in hand with economic growth, so they need to take actions to accommodate foreign investors,” said Bruno Jaspaert, chairman of the European Chamber of Commerce in Vietnam and chief executive of Deep C Industrial Zones, a Belgian industrial real estate developer. “If they can appease the U.S. and China, which so far they have been able to do, I believe they could come out a winner in these chaotic times.”

The first 21 years after it was established in Haiphong, Deep C attracted $1 billion in investment, Jaspaert said. In the past seven years, it’s attracted $7 billion.

Deep C general sales and marketing director Koen Soenens in his office in Haiphong in northeastern Vietnam.

When Koen Soenens joined Deep C in 2019, his orientation included a presentation with a photo of Trump, whose tariffs had become the impetus for more factories to invest in Vietnam. “The story behind that picture was actually very straightforward. He was at that time our best salesperson,” the company’s general sales and marketing director explained.

Six years later, that image is just as relevant to understanding the industry, but its significance has changed, he said: “[Trump] is the one who is backstabbing Vietnam.”

Since the tariffs on Vietnam were announced, Soenens has watched company executives react with devastation, disappointment and as of Thursday, hope. The three-month reprieve could give manufacturers time to reduce reliance on exports to the U.S. and assess the possibility of building factories in countries with lower tariff rates while Vietnam negotiates with the U.S.

An airbag production factory run by Swedish company Autoliv, at Amata Industrial Park in Quang Ninh province, Vietnam.

If the reciprocal tariffs take effect at the proposed rate, Vietnam will face the third-highest U.S. import duties in the world, after China and Cambodia. Trump postponed the 49% import duty on Cambodian goods Wednesday, but increased tariffs on China to 145%.

“It’s never going to go back to what it was before, that’s very obvious,” Soenens said. “The relocation from China to elsewhere continues, and then it will be a fight between Vietnam and some of the other countries.”

The rush to build factories in Vietnam has strained the country’s labor supply in recent years. For factories that need more than 100,000 workers, Vietnam is no longer an option, he added.

A slowdown in foreign investment could ease that strain and free up more resources, benefiting Vietnam-based manufacturers that aren’t subject to Trump’s reciprocal tariffs. For example, Soenens said auto parts manufacturers here are only subject to a global 25% tariff on exports to the U.S. He added that one Tesla supplier was optimistic the reciprocal tariffs could make local hiring easier for the company.

Another constraint in Vietnam’s industrial development is the country’s power grid, Soenens said, and its lag in accommodating renewable energy.

Tariffs aside, such bottlenecks threaten to derail Vietnam’s economic growth if left unresolved, said Francois of Delta West.

“It’s very likely the dominant theme of Vietnam going forward will be how to be more efficient, more productive,” Francois said. “This is the single focus of the Vietnamese strategy to keep growing.”