What Is Happening?
With their complex and tumultuous shared history, Washington and Hanoi now find themselves at the crossroads amid leadership change. Vietnam recently witnessed high-level political machinations in Hanoi. The death of former Secretary-General of the Communist Party of Vietnam (CPV) Nguyễn Phú Trọng ringed in a period of volatility, during which the presidency changed hands several times amid a contentious anti-corruption campaign. Ultimately, former Minister of Public Security Tô Lâm took over as CPV’s Secretary-General and the country’s new president. However, he soon relinquished the presidency to General Lương Cường. With Donald Trump back in the White House, the relationship between the two new administrations will have crucial implications for the Indo-Pacific region’s geopolitical and economic dynamics.
What is the broader picture?
Political stability is a cornerstone of Vietnam’s economic success. However, turbulent leadership changes over the past two years have undermined the image of stability among Hanoi’s international partners. In the post-pandemic era, Vietnam has experienced a record surge in foreign direct investments. It is seen as one of the biggest beneficiaries of the “de-risking” strategy adopted by high-income economies around the globe while distancing themselves from the People’s Republic of China. However, corruption remains a persistent issue, causing some businesses to divert their investments elsewhere or withdraw from Vietnam entirely.
Tô Lâm now firmly holds the reins of power, suggesting that political stability will likely endure until 2026, when the party congress will convene to elect new leadership. While authoritarian, Tô Lâm is also a pragmatist who understands that the legitimacy of the party—and thus the regime’s security—depends mainly on economic development. This pragmatism sets the stage for advancing ties with the United States, an important trading and strategically significant partner for Vietnam. By deploying its idiosyncratic “bamboo diplomacy” strategy, the country must carefully navigate its foreign policy through the increasingly turbulent geopolitical waters of the Indo-Pacific.
Despite some issues, such as the circumvention of U.S. sanctions on Chinese goods and an increasing trade imbalance unfavorable to Washington, the Trump administration’s first term marked significant progress in U.S.-Vietnam relations. Its achievements included high-level meetings, Vietnam’s aid during the COVID-19 pandemic, enhanced security cooperation in arms sales, and transfer of High Endurance Cutters to Vietnam’s Coast Guard or port visits by two U.S. aircraft carriers.
Amid Hanoi’s concerns about growing Chinese assertiveness in the region, these events helped bridge historical grievances and foster strategic trust between the former adversaries. This year’s elevation of the relationship to a “comprehensive strategic partnership,” the highest level of bilateral relations, marked the pinnacle of this reproachment. By taking this step, Hanoi even bypassed the intermediate “strategic partnership” level, risking Beijing’s ire but securing an enticing offer from Washington: to transform Vietnam into a hub for cutting-edge semiconductor manufacturing integrated into U.S.-friendly supply chains as part of the American “friend-shoring” policy.
It remains uncertain whether Washington and Hanoi will sustain these positive dynamics with new leaders in office. However, given the transactional nature of both leaders’ approaches and their shared perception of the Chinese threat, it is perhaps more likely they will find common ground on unresolved issues. With the ongoing war in Ukraine highlighting the shortcomings of Russian military systems, Vietnam may also pursue additional purchases of U.S. defense systems. Such acquisitions could, therefore, help reduce Vietnam’s trade surplus with the United States, a sore point for Donald Trump. Another unresolved question is how the Trump administration will address human rights violations in Vietnam. While Trump is infamously indifferent to such issues, his future Secretary of State, Marco Rubio, has a long record of championing human rights in Southeast Asia, including Vietnam.
Why is it important?
President-elect Trump also has recently established new private business interests in Vietnam. His family business, the Trump Organization, lately signed a memorandum to develop a $1.5 billion luxury golf resort in Hung Yen Province—the home region of CPV leader Tô Lâm—with Trump himself attending the ceremony. This raises questions about how much Trump will prioritize his business ventures at the expense of his administration’s interests. Observers will closely watch whether Trump, who labeled Vietnam as “the worst abuser” of American trade in 2019, will continue to criticize the country the same way—or whether his investments will soften his tone. The implications of his private business activities, evident conflicts of interest, and direct ties to Vietnam’s ruling clique for bilateral relations remain to be seen. It is clear, however, that business—whether in the form of strategic U.S. investments, U.S. arms sales, or Trump’s private ventures—will play a central role in shaping U.S.-Vietnam relations moving forward.
