At the expense of what did Vietnam surpass China to become the USA's new "factory"?
The trade war between the US and China is causing the emergence of new manufacturing hubs in the global economy. One of the countries benefiting the most from this process is Vietnam. In the first half of 2026, this country recorded a trade surplus of $114 billion with the United States, becoming the absolute leader in this regard, surpassing China, Mexico, and Taiwan.
How Vietnam surpassed China to become the USA's new "factory"
The impact of the tariff war
US President Donald Trump's tariff policy against China is serving as an important factor in the rapid increase of Vietnam's exports.
After the US sharply increased tariffs on Chinese goods, many companies began moving part of their production from China to other countries. Vietnam became one of the most attractive destinations for such companies. A simple example of this is the TOV Furniture factory in the US. Within a year, the company sharply changed the structure of its product supply: previously, 60 percent of its goods came from China and 25 percent from Vietnam, but now this ratio has reversed.
Although India also has a large trade surplus with the US, its figure for the first half of 2026 stood at 58.4 billion dollars. This is almost twice as less as Vietnam's positive difference.
According to a study by US Federal Reserve economists, China's exports to the US decreased from 463 billion dollars to 327 billion dollars in 2025. That is, China lost more than 136 billion dollars in trade volume in the US market. During this period, Vietnam's exports to the US increased from 142 billion dollars to 201 billion dollars. It is emphasized that nearly 59 billion dollars of the export volume lost by China was filled precisely by Vietnam.
According to experts, it is incorrect to explain Vietnam's current success solely by the confrontation between the US and China. For several decades, the country has been shaping an economic model focused on production and export. In particular, in the 80s of the last century, the Vietnamese government launched the "Doi Moi" — "Renovation" reform program. It is precisely because of this program that a poor and closed state became one of the fastest-growing economies in the world.
Until 1986, a strictly planned socialist economy prevailed in Vietnam. People worked in collective farms similar to kolkhozes, and only the state determined what to produce and at what price to sell it. This system caused a series of crises. Because farmers had no incentive to work harder, food shortages arose in the country. Industry ground to a halt, and finding daily necessities in stores also became a problem. To emerge from this crisis, the government announced a new model called the "socialist-oriented market economy." That is, while maintaining political control, the state gave freedom to the economy.