Following a stock market downturn in Vietnam on Thursday after the U.S. announced a 46-percent reciprocal tariff on Vietnamese exports, VinaCapital, a leading fund management company in Vietnam, is seeking buying opportunities in undervalued stocks with strong fundamentals and limited direct exposure to the new tax policy.

The tariff announcement resulted in Vietnam’s benchmark VN-Index dropping nearly seven percent, with the selling remaining fairly uniform across the board, indicating that market participants will need more time and information to digest the likely impact of the tax policy on the economy and earnings growth.

Michael Kokalari, chief economist at VinaCapital Fund Management JSC (VCFM), said the company is assessing investment portfolios under different scenarios while looking to capitalize on short-term market panic. 

“The sell-off gives active fund managers an opportunity to buy stocks that are fundamentally sound and will not be overly impacted by the tariffs at cheaper valuations,” he said.

He emphasized that companies poised to benefit most will likely be those supported by government efforts to offset the impact of the tariffs on Vietnam’s GDP growth.

To help restore trade balance, the VCFM expert underlined the need for Vietnam to accelerate imports from the U.S.

“We have heard from secondary sources that Trump administration officials appreciate the initial efforts Vietnam is making to cooperate with efforts to reduce the numerical trade balance between the two countries, but U.S. trade officials will not be assuaged by promises to make purchases at some future date,” the VinaCapital chief economist said. 

According to VCFM, the 46-percent tariff figure is based on the Council of Economic Advisors assessment that Vietnam is charging 90-percent tariffs on imports of U.S. products. 

That figure was essentially halved to the final 46-percent “reciprocal tariff” rate on Vietnam by applying this formula which can be found on the U.S. Trade Representative’s website, and which incorporates an estimate of the price elasticity of U.S. imports and the pass through of tariffs to consumer prices.

However, the U.S. Trade Representative published a report on Tuesday asserting that “the majority of U.S. exports to Vietnam face tariffs of 15 percent or less.” 

Furthermore, there was some credible analysis from Bloomberg and others that Vietnam’s tariffs on imports from the U.S. were about seven percentage points higher than U.S. tariffs on imports from Vietnam and the two countries’ effective import taxes on each other are more-or-less equal when considering the trade weighted flow of commerce between them.

The White House asserted that Vietnam is charging 90-percent tariffs on imports from the U.S.

This figure was derived by dividing the U.S. trade deficit with Vietnam by the U.S. imports from Vietnam, or by dividing the US$123-billion trade deficit with Vietnam in 2024 by its $137 billion of imports from Vietnam.

This calculation matches the “tariffs on U.S. imports” figures President Trump showed for various countries on the board he held up to reporters at his press conference announcing the tariffs, with the trade deficit and import figures directly sourced from Annex II of the above-mentioned U.S. Trade Representative report.

This calculation also matches with President Trump’s view that countries that have large trade surpluses with the U.S. are “ripping us off.”

In short, the Trump administration seems to have based its entire trade and tariff strategy - or at least its entire opening negotiation position - on the numerical trade balances, the VCFM chief economist added.

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