The world is entering the current wave of economic and geopolitical turbulence at a time when the global economy had appeared to regain relative stability over the past year. Notably, this latest shock directly strikes the “lifeblood” of the global economy – the energy market and logistics operations. Regarding the impact of this shock on export-oriented businesses, including the textile and garment sector, Dr. Le Tien Truong – Chairman of the Board of Vietnam National Textile and Garment Group (Vinatex), stated that enterprises need to promptly capture and monitor signals from these fluctuations in order to develop appropriate production and business scenarios.
* Could you share your views on how the ongoing war in the Middle East may affect the operations of export-oriented businesses, including those in the textile and garment industry. Particularly, given that a large volume of our shipments to European and North American markets must pass through this region?
At this time, it is still difficult to make highly accurate forecasts about how the situation will evolve in the coming period. However, as soon as the fighting broke out, it immediately disrupted logistics routes passing through the Strait of Hormuz and the Suez Canal, which are key corridors for transporting goods to Europe. For shipments to North America, there is another possible route via the Pacific Ocean and the Panama Canal. However, this route has relatively few refueling stations and is typically feasible only for very large vessels. Therefore, for export-oriented enterprises, the immediate concern is whether goods can be delivered on schedule in the short term, as delivery times may be extended. Subsequent effects as military conflicts tend to drive up oil prices, which in turn raises energy costs as well as the prices of petroleum-based raw materials, as in the textile and garment industry, the cost of materials such as Polyester fibers may increase accordingly.
However, for consumer-oriented industries such as the textile and garment sector, when conflicts break out, the greatest concern is the potential shift in consumer behavior across countries, including the two major markets: the United States and Europe.
For enterprises such as Vinatex, we are continuing to focus our maximum efforts on fulfilling the signed orders. In reality, the current order volume remains relatively strong, especially after the reciprocal tariffs were abolished on February 20, 2026, and a new global supplementary tariff of 10–15% was introduced for all countries. As a result, Vietnam is now in a similar position to other countries and is no longer subject to higher tariff rates as before. Previously, India’s tariff had been reduced to 15%, while Vietnam’s rate remained at 20%.
We remain committed to maximizing both production speed and efficiency. This includes measures to shorten production time in Vietnam in order to partially offset the extended delivery times caused by longer logistics routes, while continuing to serve our key markets effectively.
*So, as oil prices rise and push up related costs, production costs will inevitably increase as well, which may lead to a decline in orders. What is your assessment of this issue?
Whether the prices of raw materials rise or fall largely depends on the duration of the conflict. If the fighting ends quickly, the impact will likely be limited. However, if the conflict becomes prolonged, much like the Russia–Ukraine conflict, which has now lasted for more than 4 years, the negative effects could last longer. One key difference compared with the past is that after 2025, inventory levels across markets have generally returned to relatively normal levels. Unlike the situation in 2023 following the economic downturn, there is currently no significant backlog of excess inventory. In the United States throughout 2025, fashion inventories were consistently maintained at around USD 57–58 billion, which represents a typical level for the market. Therefore, even if demand weakens, the decline is unlikely to be as sharp as it was in 2023.
We hope that the conflict will end soon and that its negative impacts on the economy and businesses will only be short-term. At present, these effects have not yet immediately altered the selling prices of goods. If the conflict ends quickly, export activities could return to normal conditions, and energy prices in the new phase may even fall below the levels seen before the conflict began.
Therefore, in order to obtain a clearer picture and more accurate forecasts, we need to continue closely monitoring how the conflict unfolds. At the same time, there is strong hope that the parties involved will soon bring this conflict to an end so that the global economy can return to normal conditions.
*In your opinion, how should textile and garment enterprises respond to these fluctuations?
At present, the main concern is that delivery times may become longer. The second issue is the sudden rise in cargo insurance costs, as insurance companies are likely to increase their premiums. Therefore, beyond transportation costs, the more critical concerns are delivery time and cargo insurance expenses. Since these are short-term orders and our clients in the United States and Europe are long-standing partners, both sides maintain strategic relationships and can sit down together to discuss and negotiate these matters. In many ways, this situation is similar to the disruptions experienced during the COVID-19 pandemic or the economic downturn in 2023.
Overall, the market environment in 2026 continues to face significant uncertainties related to tariffs, geopolitics, rising energy and logistics costs, requiring the entire system to remain proactive, flexible, and prepared with concrete action plans based on different forecast scenarios.
First, for the EU market, companies should prepare appropriate delivery plans in case shipping routes change, logistics costs increase, and transportation times become longer. Enterprises need to reassess their raw material requirements, pricing structures, and production schedules, while proactively accelerating production to offset longer transit times and minimize the risks of delayed deliveries and additional costs.
For the U.S. market, amid the decline of the U.S. Dollar Index (DXY) and the pressure on decreasing prices due to more expensive imported goods, businesses should be prepared for customers to continue requesting price adjustments. At the same time, Chinese yuan being maintained at a relatively low level also creates additional price competition. On that basis, companies should prioritize fulfilling orders destined for the U.S. as soon as possible, taking advantage of the 150-day period during which the additional tariffs of 10–15% remain in effect. This would help optimize delivery schedules and minimize risks should policy changes become less favorable in the future.
In addition, although orders are already full till the second quarter, if new orders arise, garment enterprises should make every effort to take them on. They should avoid spreading their production plans evenly across the entire year and instead recognize that when opportunities for high-efficiency business emerge in a volatile environment, they must be fully seized.
Export-oriented enterprises also need to closely monitor and update information that the U.S. government is set to launch two new trade investigations under Section 301 of the Trade Act of 1974. These investigations will focus on industrial overcapacity in several major economies as well as the issue of forced labor in global supply chains, in order to establish the legal basis for potential new tariffs. Therefore, Businesses should be well prepared to respond promptly.
For the yarn sector, enterprises should closely monitor the rise in oil prices, which is pushing up the prices of petrochemical raw materials, particularly Polyester fiber, while also has spillover effects on cotton prices. However, given that global demand for yarn remains weak, companies need to strictly control inventories and align production with market signals in order to avoid the risk of shrinking profit margins.
Under conditions where “high tariffs become the new normal” and geopolitical uncertainties continue to persist, the ability to maintain a balanced rhythm across production – finance – markets will determine the resilience of enterprises. The entire Vinatex system needs to maximize strengths in production organization, order management, and close coordination through the Yarn and Garment Production–Business Committees. This will help maintain market share, stabilize employment, and ensure the achievement of growth targets for 2026.
*Thank you for the interview!
