Vietnam’s garment exports are set to rise by 14.8 per cent this year to $35 bn, an industry official said, as US retailers diversify their product sourcing to keep costs under control amid an escalating trade dispute with China. The US has already imposed tariffs on $250 bn worth of Chinese goods, and China has responded with retaliatory duties on $110 bn worth of US goods.

Garments, Vietnam’s second largest export-earner after smartphones, are not yet subject to the US tariffs, although some manufacturers have sought to move at least some production to the Southeast Asian country, anticipating potential penalties. “We are seeing more and more orders coming in, especially from the United States,” Vu Duc Giang, Chairman of Vietnam Textile & Apparel Association, said.

Garment exports to the United States rose 12 per cent in the January-October period to $10.5 bn, while exports to China surged 40 per cent to $1.1 bn, according to a government statement. NGO Quang Thoa, Chairman of Swimax International Joint Stock Co, a contractor which produces swimwear and underwear products for the US companies such as Target and Express, said he had received a large increase in orders from the United States since January.

“This is because of the trade war between the US and China,” said Thoa, who added that he expected to see his exports to the United States increase by up to 20 per cent by the end of the year.

“Some US clients are already making strategic adjustments to their business plans to diversify their supplies, even though Trump hasn’t targeted Chinese garments in the tariff war yet,” he said.

Vietnam is home to over 6,000 textile and garment factories which employ around three million people, government statement said. Giang, Chairman of Vietnam Textile & Apparel Association, said those figures were likely to grow, thanks to a plethora of Vietnamese free-trade agreements, and not just because of the US-China trade spat.

Vietnam has signed around a dozen free-trade agreements that will remove or reduce taxes on several imports and exports. Foreign investors poured in $2 bn in Vietnam’s garment and textile production in the first eight months of this year, Giang said. Most investors were from Japan, South Korea, Taiwan and China, he added. “They have been upping their investment in Vietnam for years,” said Giang.