The president of the United States, Donald Trump, has imposed heavy tariffs on several countries, including Vietnam. As a result, it will cost Samsung a lot more to import phones to the US from Vietnam. Since the high tariffs will reduce profit margins, Samsung is planning to shift a large part of its Vietnamese production hub to India. This will cut the tariff burden as India currently has a 90-day pause on tariffs, and the tariff rate is also much lower than Vietnamโs.
Samsung plans to ramp up manufacturing in India
On Vietnamese goods, the tariff rate is 46%, which is extremely steep. For India, the export duty is only 26%, making it a viable manufacturing base for Samsung to ship products to the US. Currently, most Galaxy smartphones sold in the US are manufactured in Vietnam. The Korean firm exports nearly 55 billion dollarsโ worth of electronics from the country. The 46% tariff rate on Vietnam severely impacts its business.
Samsung already manufactures smartphones in India, but mostly for the local market. So, in the short term, the company has enough resources to ramp up Indian production for US exports and save profit margins. โSamsung will find it better to ship from India at a duty of 26% than export from Vietnam. While this will be a temporary measure till the Vietnamese govt negotiates with the US, it adds a lot of importance to Make in India,โ an industry official told The Times of India.
Additionally, the Vietnamese government is reportedly in talks with the US government to help Samsung, one of the largest contributors to the Vietnamese economy. The Vietnamese government said it would remove tariffs on goods from the US if the Trump administration did the same for Vietnamese exports. If the two governments reach a new trade agreement, it will be a massive relief for Samsung.
