New U.S. tariffs could crush VinFast’s EV dreams — or force a major pivot

Vietnamese electric vehicle (EV) manufacturer VinFast is facing mounting challenges in the U.S. automotive market following the implementation of a new 25% tariff on all imported vehicles. Introduced in April 2025 as part of a broader initiative to encourage domestic manufacturing and address trade imbalances, the policy directly affects automakers like VinFast that currently export vehicles assembled outside of the United States.

Potential impact on pricing and competitiveness

The 25% tariff could lead to increased retail prices for VinFast vehicles in the U.S., depending on how the company chooses to respond. If absorbed by the manufacturer, the tariff would reduce already tight profit margins. If passed on to consumers, it could make VinFast’s models less competitive compared to domestically built alternatives, such as those from Tesla or Ford. The situation is further complicated by the company’s global supply chain, which includes components from countries like China—raising additional questions about eligibility for favorable trade terms under agreements like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). To qualify, VinFast would need to certify that a significant portion of its vehicles’ content originates from partner nations, a requirement that may not be straightforward.

Local production and policy maneuvering

VinFast has announced plans to open a manufacturing plant in North Carolina to reduce its exposure to tariffs and establish a stronger local presence. Once operational, this facility could allow VinFast to avoid import duties entirely and improve logistics and brand perception in the U.S. However, construction delays have pushed back the timeline, leaving the company reliant on imported vehicles in the short term. On the diplomatic front, the Vietnamese government has expressed interest in reducing import duties on U.S. vehicles, a potential goodwill measure that may aim to ease trade tensions and create a more balanced environment.

Future prospects

VinFast’s ability to succeed in the U.S. will hinge on its capacity to adapt to shifting trade dynamics and regulatory demands. The new tariff policy introduces significant uncertainty, particularly around pricing strategies and market competitiveness. Whether through accelerating domestic production, restructuring supply chains, or leveraging trade diplomacy, the company will need to be flexible and proactive. VinFast’s situation illustrates the broader difficulties that emerging international automakers face when entering tightly regulated or politically sensitive markets.