With Vietnam’s wood industry now the world’s second-largest processor and exporter after China, the country’s $9.46 billion in 2025 timber sales to the United States, equivalent to 55.6 per cent of total wood exports, has exposed a structural margin trap that the sector cannot resolve through additional volume. That is according to Ngo Sy Hoai, Secretary General of the Vietnam Timber and Forest Products Association (VIFOREST), who told VietnamNet the processing-led growth model has reached its limits.
Whilst the US remains the dominant world consumer market and what Hoai called the “consumption axis”, Vietnamese wood enterprises operate on profit margins of just 5 to 6 per cent under original equipment manufacturer (OEM) contracts, with US importers supplying the designs and capturing most of the value. “The more they produce, the higher the risks,” Hoai said, with margins compressing further whenever trade remedies are imposed, or contracts are renegotiated.
Despite a European Union population of around 450 million — larger than the 340 million US market — Vietnamese wood exports to the bloc amount to only $0.75 billion, almost 13 times smaller than the US trade. The asymmetry exposes a sharp diversification challenge facing Hanoi, as Vietnam has spent two decades building its US channel to a depth that alternative markets cannot absorb redirected volume at comparable price points.
Whilst South Korea has imposed anti-dumping duties of 10 to 30 per cent on Vietnamese plywood, the price gap between the two markets illustrates the secondary risk facing any diversification push. Plywood exported to South Korea sells at $230 to $250 per cubic metre for the low-end packaging segment, against $400 to $500 per cubic metre for the higher-grade product shipped into the United States.
Although Vietnam was earlier seen as the “+1” supplier in the United States’ “China+” friend-shoring strategy, the growing trade surplus has since drawn more frequent US trade remedy actions, with what Hoai called “black swan” enforcement events now forcing manufacturers to rethink long-term exposure. The OEM dependence means importers can pressure price cuts, delay payments or cancel contracts when tariffs are imposed, shifting the burden onto Vietnamese factories already running thin margins.
Hoai argues that processing alone, the OEM or “labor-for-profit” model, cannot anchor the sector at the top of the global wood trade indefinitely, with continued reliance on imported designs and orders leaving manufacturers exposed to the next round of US trade policy. Vietnam ships nearly $10 billion in timber and non-timber forest products combined into the US each year, making any further tariff move a direct test of margin resilience across the wood value chain.
Hoai concedes the shift away from OEM cannot be resolved overnight, with Vietnam’s 5 to 6 per cent margins now squarely exposed to the next round of US tariff action on a $9.46 billion export base.
