Vietnam outruns two Asian giants

Vietnam has outpaced China, Mexico, and Taiwan to record the largest trade surplus with the United States in the first half of 2026, according to a report by TOI's Chidanand Rajghatta. The surplus stood at $114 billion for the period, surpassing China's $202 billion and Mexico's $197 billion. Vietnam, a country of around 100 million people and a $500 billion economy, is now poised to become the largest exporter to the US.

Policy shifts dating back to the 1980s, known as Doi Moi reforms, have been instrumental in Vietnam's trade growth. The United States lifted its trade embargo on Vietnam in 1994, and bilateral trade has since surged. Vietnam's export-oriented manufacturing strategy, regional trade arrangements, foreign investment, and industrial infrastructure development have all contributed to its rapid economic growth. By 2023, two-way trade between the two countries stood at nearly $124 billion.

Vietnam's trade-to-GDP ratio is close to 170%, one of the highest globally. Several multinational companies, such as Samsung, Intel, and Foxconn, have expanded operations in Vietnam due to its cost competitiveness and proximity to China's manufacturing base. This has enabled Vietnam to benefit from a "China plus one" sourcing strategy as Chinese wages rose and US-China trade tensions escalated.

In comparison to India, Vietnam has a much larger trade surplus with the US, despite India's significantly larger population. India's trade surplus with the US is $58.4 billion, while Vietnam's is $114 billion. Factors contributing to Vietnam's success include its focus on converting foreign investment and labor costs into export-oriented manufacturing tied to US supply chains.

The report also highlights the need for improvements in India's infrastructure, labor-market regulation, compliance requirements, and integration into global value chains.