Faced with increasing stress from US tariffs, the wood industry grapples with numerous obstacles
The wood industry in Vietnam is bracing for tough times, with experts predicting a further deterioration in the fourth quarter of the year as orders continue to decline. This comes amidst a series of challenges, both domestic and international, that are putting pressure on the sector.
One of the most significant threats is the potential 46% countervailing tariff announced by the US administration on Vietnamese goods. The wood sector is among those most at risk, as the United States was Vietnam's largest export market for wood products, accounting for $5.41 billion or 56% of the total.
The strong position of Vietnam in the US market is largely due to cost advantages, including low labor costs and the use of 70% domestically sourced materials. However, these advantages may not be enough to offset the impact of the proposed tariff.
Export prospects for the second half of the year appear uncertain, with adverse impacts becoming visible as early as the third quarter. Many Vietnamese exporters are facing a shrinking European market, which is adding to the pressure.
Selling prices in the wood industry are falling, and maritime freight costs have been trending upward, especially on routes to Europe and the US. These factors, combined with the uncertainty surrounding the tariff negotiations, are making it difficult for businesses to maintain profitability.
In the first seven months of 2025, wood and wood products were Vietnam's seventh-largest export category, reaching $9.65 billion. However, many leading exporters have reported declines in revenue and profits. For instance, Thuan An Wood Processing JSC posted a 19% decline in revenue and a 38% decrease in post-tax profits, while Duc Thanh Wood Processing JSC reported a 20% decline in revenue in the second quarter of 2025, with a 13% increase in post-tax profit.
An Cuong Wood Working JSC saw a 6% drop in revenue, but a 17% increase in post-tax profit. The discrepancy between revenue and profit indicates that businesses are finding ways to cut costs, but it also suggests that the anticipated recovery has not fully materialized.
To reduce dependence on the US market, Japan, China, and the European Union have been identified as potential export markets to diversify and mitigate risks for the Vietnamese wood sector. However, these markets come with their own set of challenges, and many customers are delaying delivery of orders ahead of market developments.
Import partners are uncertain about the situation, causing transaction timelines to stretch out. Clients are also pushing for shared cost responsibility for import taxes, forcing businesses to raise prices.
Despite the challenges, the wood industry is still operating, largely in a holding pattern. Dang Quoc Hung, a prominent industry figure, warns that the export wood market will face even greater challenges in the near future.
As the situation unfolds, the resilience and adaptability of the Vietnamese wood sector will be tested. The industry will need to find innovative solutions to navigate these uncertain times and secure its future in the global market.
