Fifty years ago the United States spent an estimated US$170 billion (A$261.1 billion) fighting a war in Vietnam it was never going to win, in today’s money that around US$1 trillion. Fast forward to 2025 and a litany of failed wars the U.S. has engaged in - following Vietnam and Korea before it - have contributed to a blowout in national debt that now exceeds US$37 trillion.
Add to that President Donald Trump’s "Big Beautiful Bill Act" - extending 2017 tax cuts indefinitely while slashing social spending - which will add a further $3 trillion to government debt over the next ten years to 2034, and it's easy to see why the U.S. economy is in serious trouble.
America in trouble
While Trump’s Big Beautiful Bill Act will increase debt to 124% of gross domestic product (GDP), it would increase to $4.5 trillion over ten years and take debt to 128% of GDP if some tax initiatives are made permanent.
Unsurprisingly, ratings agency Moody's has cited concerns about the growth of U.S. federal debt, while global investors now question the country’s safe-haven status in light of such economic instability. While the U.S. is currently struggling to earn enough money to service its mounting debt, a decision by foreign governments to exit U.S. bonds would be grave for the U.S. economy.
Meantime, while the Trump Administration is looking to tariffs to help pay down 50-plus years of spiralling debt, Vietnam - one of the countries directly responsible for a decent chunk of that debt - is well on its way to being the world’s next economic superpower.
Asia’s next ‘baby tiger’
In this emerging tale of two economies – the U.S and Vietnam - the universe appears to be metering its own sense of poetic justice.
Referred to now as Asia's next ‘baby tiger’ economy, Vietnam’s government has set a GDP growth target of at least 8% for 2025 – U.S. GDP growth 3% - with plans to reach double-digit growth in the following years.
While the country aims to get rich by 2045, Vietnam’s growth trajectory since 1990 is outstanding. Since then, Vietnam’s booming, low-cost, export-led economy has lifted more of the country’s working poor into the middle class.
In the past 35 years, the affordability of the average Vietnamese has risen from $1,840 worth of goods and services to $25,100 in 2025.
Ironically, souring trade between the U.S. and China has played into the hands of Vietnam, which now calls America its largest export market.
In response to Vietnam’s US$123.5 billion trade surplus, U.S. President Trump threatened to impose a 46% U.S. import tax on Vietnamese goods, however, this has since been reduced to 20%.
Diversification
Having taken its cue from other Asian economies that relied too heavily on single sources of economic strength – Korea (electronics), Taiwan (semiconductors) and Singapore (finance) Vietnam has by comparison a much more diversified and complex economic base.
As a result, it's less exposed to cheap labour as a driver of economic competitiveness.
In addition to renewables, AI, and other high-tech sectors, Vietnam is investing heavily in infrastructure projects, like civilian nuclear plants and a US$67 billion north-south high speed railway.
Then there are plans for Vietnam to become a global financial hub - with special financial centres in Ho Chi Min City and the resort city of Danang – with simplified rules and tax breaks to attract foreign investment and fintech startups.
As part of a broader administrative reform, Vietnam is planning to halve its 63 provinces and municipalities while also reducing the number of communes.
Through the aid of easier loans, Vietnam expects to have catapulted at least 20 private firms to a global scale. Meanwhile, private firms, like their SOE counterparts, tend to operate in industries with low technological complexity, limited room for export growth and few opportunities for upgrading.
As it currently stands, foreign-invested enterprises account for a staggering 74.2% of Vietnamese exports, up from 47% in 2000.
Only two manufacturing SOEs — Saigon Beer Company and Vinamilk — ranked among the top ten firms by revenue between 2015 and 2023 - with most of their revenue derived from the Vietnamese market.
Mitigate climate risk
However, while Vietnam is deeply embedded in “Factory Asia”, it currently lacks the industrial resilience to withstand major external shocks.
As a result, the country is also planning to take the necessary steps to mitigate climate risks, following typhoon Yagi last year that caused US$1.6 billion in damage, which shaved 0.15% off the country’s GDP.
Based on World Bank reports, if Vietnam doesn’t take the necessary steps to reduce climate change, the economy could lose 12-14.5% of its GDP by 2050, with 1 million people potentially falling into poverty by 2030.
BRICS entry
Given that China is currently Vietnam’s largest trading partner - while Russia is an important partner in energy, oil, and gas - the country is currently contemplating its invitation to become a member of the BRICS bloc.
But despite Vietnam’s desire for more effective representation in international governance - another motivating factor for joining BRICS – it has taken a cautious approach, unlike its neighbours Malaysia and Thailand.
Vietnam also wants to avoid jeopardising its relationship with the U.S., which remains an important export market.
With Vietnam currently benefitting more by positioning itself as a neutral country, it may decide that joining BRICS is not in its best interests.
