On April 9, US President Donald Trump announced reciprocal tariffs of 10-50 percent on imports from various countries, with Vietnamese goods facing one of the highest rates at 46 percent.

Though the tariff application has been deferred for 90 days, it still poses significant challenges. Analysts say the urgent task for now is strengthening the domestic market, reducing export reliance, and enhancing resilience against global volatility.

At the seminar “Solutions to Strengthen and Develop the Domestic Market” on April 25, Bui Nguyen Anh Tuan, Deputy Director of the Domestic Market Management and Development Department under the Ministry of Industry and Trade (MOIT), said the government has set the goal of 8 percent GDP growth for 2025, driven by domestic consumption, exports, and public investment.

Domestic consumption is expected to contribute 60-65 percent annually. Tuan noted that to obtain a 12 percent growth rate, people’s average consumption needs to increase by 1.5 times over the previous year, a major challenge in the context of  modest income growth.

“In 2024, retail sales and consumer service revenue grew 9 percent. To hit 12 percent, each person and business must spend 50 percent more than last year,” Tuan said.

Stimulating domestic consumption, supporting local businesses, ensuring supply and market stability, developing modern trade infrastructure, promoting digital transformation and sustainable development are solutions that Vietnam needs to reduce dependence on major markets, Tuan said.

Tuan stressed the need to support domestic businesses with preferential financial policies, proposing low-interest credit packages for firms producing essential goods with high localization rates.

Tran Dinh Thien, an economist, commented that Trump’s tariff policies force Vietnam to rethink its development model, prioritizing the domestic market.

Data show that the private sector accounts for 51 percent of GDP, while the FDI sector contributes 20-22 percent. However, domestic exports make up only 25-27 percent, while FDI is 70 percent. Thus, the domestic market is the future for local businesses.

Yet, market bottlenecks and slow circulation persist. Thien suggested analyzing the US. tariffs’ predicted impact on Vietnam’s domestic market to devise strategic solutions.

In current conditions, Thien believes that injecting money to spur investment and improve capital flow to unblock financial and capital markets are the major solutions as they could help mobilize financial sources.

Supporting businesses will create jobs

A key proposal, performance-based tax cuts, has been made by Vo Tri Thanh, Director of the Institute for Brand and Competitiveness Strategy Research.

For instance, if a business pays VND100 billion in taxes in 2025, and VND150 billion the next year, it would enjoy a tax reduction based on the excessive tax amount (VND50 billion).

He stressed that if businesses can get support, they will create jobs and workers will have money for consumption.

He also emphasized the need to stabilize the macro economy, especially to curb inflation at low rates. If the inflation rate is higher than nominal income, it will be very difficult to increase consumption.

Nguyen Mai, chair of the Vietnam Association of Foreign Invested Enterprises (VAFIEs), said that domestic businesses should further exploit the domestic market, which, with 100 million consumers, is an attractive market.

Mai recommended reforming institutions, laws, and market-related policies. Businesses should adopt medium- and long-term strategies based on market research and volatility forecasts, focusing on branding, as few Vietnamese brands are globally strong.

Additionally, he urged domestic firms to form value chains, integrate into domestic and global supply chains, and build large-scale globally competitive enterprises.

Other experts also advised businesses to further exploit the domestic market which promises more potential than thought.

VCCI (Vietnam Chamber of Commerce and Industry) chair Pham Tan Cong said businesses should effectively utilize the 90-day tariff deferral to optimize export orders to the US while seeking and expanding new markets, including the domestic market.

“The domestic market will be a ‘pillar’ for Vietnamese businesses. Vietnam is a signatory of 17 free trade agreements (FTAs), and it is negotiating others. Businesses should boldly and proactively penetrate these markets,” Cong said.

VCCI has proposed that the government allocate a budget to support businesses to help them overcome current challenges. Part of the budget will be reserved for trade promotion through new programs, or direct support will be given to enterprises to exploit new markets.

Nguyen Le