Is High Import Tax the Only Barrier for Cars Entering the US Market?

In 2023, Vietnam spent over $3.6 billion on importing a total of 173,561 completely built-up (CBU) automobiles from foreign countries. Among them, the number of cars imported from the US exceeded those from some other countries; however, American cars still accounted for a relatively small proportion of Vietnam’s total car imports.

US Car Imports Trail Behind Japanese and Chinese Cars

According to a report by the General Department of Vietnam Customs, the import of CBU automobiles in Vietnam increased by 45.8% in volume and 27.6% in value in 2024.

By the end of 2024, Indonesia emerged as the top provider of imported cars for Vietnamese consumers, with a total of 70,728 vehicles, amounting to nearly $1.04 billion in value.

Thailand exported 63,769 cars to Vietnam in the same year, a lower volume compared to Indonesia, but with a higher value of nearly $1.25 billion.

In 2024, Vietnam imported 31,112 cars from China, making the country the third-largest importer of cars into the Vietnamese market. The import value of Chinese automobiles exceeded $909 million, equivalent to an average value of $29,220 per car.

As for the US, the country exported 654 cars to Vietnam, with an import value of over $23 million. This volume is higher than the 3,903 cars imported from Japan in the same period but remains lower than those from South Korea (458 cars) and Germany (245 cars).

Overall, while the volume of car imports from the US surpasses some other countries and territories, their overall proportion in Vietnam’s import structure remains relatively low.

Are Tariffs the Only Barrier?

Tariffs are considered a contributing factor to the limited number of American cars in Vietnam. According to Decree 73, import tariffs on cars from the US have been reduced by 13-14%, depending on classification, since March 31.

Import tariffs on cars from the US to Vietnam have been reduced but remain high. Image: T.T.

Despite the significant reduction, sedans with engines larger than 2.0L and smaller than 2.5L manufactured in the US are still subject to a 50% import tariff when entering Vietnam. Four-wheel-drive vehicles with engines larger than 3.0L are now taxed at 32% since March 31.

In addition to import tariffs, cars are also subject to a special consumption tax of up to 150% and various other costs, effectively blocking the path for American cars to enter the Vietnamese market.

Due to this “barrier,” even a quintessential American brand like Ford only imports the Ford Explorer to Vietnam. This large SUV is currently available in the Limited 2.3L Ecoboost version, priced at nearly $90,000.

Ford Explorer is the only model that Ford imports from the US to Vietnam. Image: Bối Hạ.

Other brands like Jeep, Mercedes, and BMW also import a limited number of models from the US, including the Mercedes-Benz GLE 450 AMG, Mercedes-Maybach GLS 600 4MATIC, BMW X7, and Jeep Gladiator.

Overall, American cars are scarce in the mass market, and even in the luxury segment, there aren’t many models imported from the US.

The high tariffs make car imports from the US less attractive to car manufacturers. Instead, they prefer domestic production or imports from countries with free trade agreements with Vietnam, such as Indonesia and Thailand, as evidenced by the CBU import volume in 2024 mentioned above.

Outlook for US Car Imports if Tariffs are Removed

Tariffs seem to be the only “barrier” preventing a flood of American car imports into Vietnam. So, what would happen if this barrier were removed? Would the Vietnamese market be inundated with American cars?

The answer is likely yes, but only in certain niches. The cars expected to enter Vietnam include the Ford F-150 (estimated price: $56,000-$112,000), Ford Bronco (estimated price: $65,000-$136,000), Toyota 4Runner (estimated price: $65,000), Toyota RAV4 (estimated price: $65,000-$80,000), Toyota Highlander (estimated price: $65,000-$76,000), Subaru Outback (estimated price: $47,000-$64,000), and Honda Pilot (estimated price: $59,000-$80,000), and the Acura RDX (estimated price: $73,000-$80,000).

Toyota RAV4 is one of the models anticipated to enter Vietnam if import tariffs on US cars are eliminated. Image: CarBuzz.

Iconic American muscle cars like the Ford Mustang (estimated price: $62,000) and Dodge Challenger (estimated price: $76,000) would also make their way to Vietnam if the two countries agree to eliminate import tariffs on American cars.

These American cars would likely be introduced by non-official importers, while car manufacturers would take more time to bring new models to the market.

For mass-market models already familiar to Vietnamese consumers, it’s unlikely that manufacturers will switch to US imports instead of local assembly or imports from Thailand or Indonesia. However, some special versions available in the US market could be offered to Vietnamese customers, albeit in limited quantities.

Moreover, the complete removal of tariff barriers could provide an opportunity for Tesla to enter the Vietnamese market with its well-known electric vehicle models, such as the Model 3, Model Y, Model S, Model X, and the Cybertruck electric pickup truck. In this scenario, Vietnamese consumers would gain more choices in the electric vehicle segment from one of the world’s leading electric car brands.

Reduced import tariffs on US cars to 0% could pave the way for Tesla to enter the Vietnamese market. Image: Tesla.

It remains unclear if import tariffs on US cars will be adjusted. However, if the tariffs are eliminated, the Vietnamese car market will witness unprecedented excitement due to the competition among Korean, Japanese, Chinese, and American car brands, along with a diverse range of “novel” imported models.

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