Laos ready for Trump tariff blow.

Laos Faces a Looming Tariff Threat

Daily Uncertainty in Vientiane

In the capital, a Lao garment vendor weighs the danger of U.S. trade tariffs. “I just live day by day,” she told AFP, speaking on condition of anonymity.

A 40 % U.S. Levy on the Horizon

Donald Trump has set a Friday deadline: unless a trade deal is sealed, a 40 % tariff will take effect.

Limited Leverage and a Tight Supply Chain

• Laos exports are narrow, with only 3 – 6 % of GDP sold to the United States.
• The U.S. trade deficit with Laos last year was more than $760 million.
• Taunted by transshipment tactics, Laos’s solar panel output surged in 2023 after Trump hit China with a 50 % tariff on renewable power.

Industry Impact Estimates

John F. Somers, head of garment firm Diep Vu Co., warned a 40 % tariff would be “a nail in the coffin” for any industry shipping to the United States.

Xaybandith Rasphone, president of the Association of the Lao Garment Industry, said:

“We estimate about 20,000 workers or more could be impacted. We’re not certain about the exact number yet, but it could easily be higher if companies shut down.”

Rasphone added that “between 35 and 40 factories could be affected if buyers are spooked by the tariffs.”

Transshipment and “Country of Origin” Rules

Casey Tolzman, head of the Lao‑American Business Association, explained that Laos’s most bargaining chip will be stricter transshipment controls. “Any deal would probably need to see Laos enforce stricter rules on transshipment and country of origin, to ensure products aren’t just coming from China and getting a Laos label slapped on.”

Seeking Relief and Long‑Term Challenges

The Lao‑American Business Association and the Lao National Chamber of Commerce and Industry are drafting an appeal for tariffs to be lowered back to previous levels—or at least capped at 20 %. Even if a deal were reached, the country faces further hurdles:

• Next year, Laos will graduate from “Least Developed Country” status and lose duty‑free access to the European Union.
• John F. Somers warned that “our industry will probably collapse within a few years, we’ll be at a competitive disadvantage.”

Conclusion

While the U.S. trade offensive currently targets a 40 % tariff on Lao goods, the real battle may lie in addressing how Laos can pivot to stronger market partnerships and reinforce its export integrity against transshipment. The outcome will shape Laos’s economic future as it navigates U.S. demands and the broader global market.