US Imposes New 12.5% Tariff on Vietnamese Goods; Ministry of Industry and Trade Issues Recommendations

The US government, via a White House Memorandum dated July 23, 2026, has initiated an investigation into Vietnam and 59 other economies under Section 301. Consequently, goods originating from Vietnam are subject to a 12.5% tariff, with exceptions for products listed in the Memorandum's Appendix. The Memorandum specifically targets items produced "wholly or in part" using forced labor, extending supply chain risks beyond final assembly to raw materials, components, and all production stages. A tariff-rate quota for certain textiles, linked to US cotton, will also be implemented to limit reliance on high-risk inputs, reflecting a global trend toward stricter input origin standards. Vietnamese officials have clarified that the US document does not mandate a single traceability protocol. However, exporters must provide reliable data on material sources, suppliers, and factories to demonstrate compliance. This requirement significantly impacts industries with complex, multi-tiered supply chains, including textiles, footwear, electronics, energy, electrical equipment, semiconductors, minerals, and farm goods. In the textile sector, firms must trace origins beyond cutting and sewing to verify cotton, yarn, fabric, dyes, and accessories. Electronics and energy companies face similar demands for oversight of components, semiconductor materials, batteries, solar panels, and critical raw inputs. To adapt to US policy shifts and Circular 31 rules, businesses must rapidly upgrade their supply chain traceability. Officials note discrepancies between US forced labor target lists and Vietnam's high-risk list; for instance, many textiles are classified as medium risk locally, while some fuels are high risk. Domestic regulations do not classify all cotton, semiconductors, solar panels, and batteries as high risk. Regardless of local classifications, companies must deeply trace raw inputs when requested by buyers. To protect trade, exporters should take concrete actions: map supply chains to identify all suppliers, retain detailed records of material sources and production sites, and categorize suppliers by risk level with extra audits for flagged sources. Standardizing traceability data by product, batch, lot, or serial number is crucial. Furthermore, businesses must enforce origin controls to prevent illegal transshipment or relabeling. Incorporating strict traceability and labor clauses into supplier contracts strengthens compliance. Establishing response teams to handle verification requests promptly is also vital. Slow or inconsistent records increase the risk of customs detentions. Traceability is now a critical risk management tool, ensuring market access and safeguarding the reputation of Vietnamese goods. On June 11, the Ministry of Industry and Trade issued Circular 31 on product traceability, which is mandatory for high-risk items and encouraged for others. Businesses can declare data on the Ministry's central portal or establish internal tracking systems that share data securely with the central system. The central system will manage merchant data and generate lookup codes for seamless information linkage.