This article briefly analyses developments in the U.S. economy in the first half of 2025 on the basis of official data, while placing them in the broader context of the global geo-economic landscape and the opportunities for Vietnamese goods in Latin America.

GDP growth: negative in Q1, strong rebound in Q2 thanks to trade adjustment

According to data from the U.S. Bureau of Economic Analysis (BEA), U.S. real GDP in Q1/2025 fell by 0.5 percent on a quarterly basis (annualised), marking the first quarter of negative growth since the pandemic period. This decline is mainly explained by two factors: a sharp increase in goods imports as businesses brought orders forward ahead of the effective date of the new tariffs imposed by the Donald Trump administration, and a decline in federal and state government spending in a number of categories.

In Q2/2025 the picture reversed clearly: GDP grew by 3.8 percent at an annualised rate, exceeding the expectations of many forecasting institutions. BEA reported that positive contributions came from household consumption remaining relatively resilient, improved private investment and, in particular, a narrowing of imports after the “front-loading” in Q1, which made the trade balance less negative and turned it into a driver of growth.

A notable point is that the structure of U.S. growth in the first half of the year bears the clear imprint of the trade-policy shock. As from 5 April 2025, the U.S. applied a baseline tariff of 10 percent on most imports, while sharply increasing tariffs on a number of product groups from China; many firms rushed to import before this date, causing imports to surge in Q1 and then plunge in Q2. Analyses by the WTO and several independent research organisations all record this “front-loading” phenomenon and regard it as one of the main reasons explaining the pattern of back-to-back negative and positive growth between the two quarters.

Inflation and the labour market: price pressures driven by tariffs

In terms of prices, U.S. inflation has stopped declining as quickly as in 2023–2024 and has shown signs of edging back up in the first half of 2025. According to the U.S. Bureau of Labor Statistics (BLS), the headline Consumer Price Index (CPI) rose 2.7 percent in the 12 months to June 2025, up from 2.4 percent in May; core inflation (excluding food and energy) increased by 2.9 percent.

The Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) price index, also showed inflation at around 2.6 percent in June 2025 – slightly above the 2 percent target and showing signs of being affected by the higher import tariffs.

On the labour-market side, the BLS “Employment Situation” report for June 2025 recorded an unemployment rate of 4.1 percent, fluctuating in the 4.0–4.2 percent range since mid-2024 – still low by historical standards, but higher than during the “red-hot” period of 2022–2023. The economy created 147,000 non-farm jobs in June, roughly in line with the average of the previous 12 months, but this came together with fairly large downward revisions to earlier months’ data, indicating that the underlying pace of job creation is weaker than the initial picture suggested.

The combination of inflation easing only slowly – and even ticking up because of tariffs – and a labour market that is “cooling gradually” makes the monetary-policy equation more difficult. The Fed has to weigh the risk of easing too early and reigniting inflation against the risk of keeping policy too tight for too long and pushing the economy into recession.

Monetary policy: the Fed “on hold” in the first half of 2025

After cutting interest rates by 0.25 percentage point in December 2024, bringing the federal funds target range down to 4.25–4.50 percent per year, the Fed kept this level unchanged at all its meetings from January to June 2025. The post-meeting statements in March and June 2025 both emphasised a “data-dependent” stance, judging that inflation remained above the 2 percent target while growth and the labour market, although slowing, had not weakened severely.

The accompanying economic projections (“dot plot”) in June 2025 showed that a majority of FOMC members still expected two rate cuts in 2025 as a whole, but there were more voices tilting towards keeping rates higher for longer out of concern about the inflationary impact of the new tariff package.

This makes the trajectory of U.S. interest rates in the second half of 2025 a hard-to-predict variable, driving volatility on international financial markets, exchange rates and capital flows into emerging economies – including Viet Nam.

FDI flows: strong swings, but the U.S. remains a core destination

On foreign direct investment, BEA data show that FDI inflows into the U.S. in Q1/2025 reached USD 52.8 billion – the second-lowest level since 2022, reflecting investor caution in the face of uncertainties about tariffs and supply chains.

In Q2, the picture reversed: based on BEA data compiled by business associations such as the Global Business Alliance, FDI into the U.S. jumped to around USD 102 billion, surpassing the USD 100 billion mark for the first time since Q3/2022. In total, FDI in the first half of 2025 reached approximately USD 145 billion, roughly equivalent to the same period of the previous year, demonstrating that the U.S. market’s long-term attractiveness remains very strong, especially in technology, artificial intelligence, energy and financial services.

However, the composition of flows shows divergence: European and Canadian investors continue to expand their presence, while part of the capital originating from economies directly affected by the tariffs – particularly some Asian countries – tends to stagnate or be redirected to third locations to “bypass” tariffs.

Implications for global trade and Vietnamese exporters

From a global perspective, the Organisation for Economic Co-operation and Development (OECD), in its Economic Outlook of December 2025, raised its growth forecast for the U.S. to around 2 percent for 2025 as a whole, thanks to investment in artificial intelligence and continued accommodative fiscal policy. However, the organisation also warned that the new rounds of U.S. tariffs will slow global trade from 2026 onwards and increase the risk of fragmentation of value chains.

For Viet Nam, the U.S. remains its largest export market, but the policy environment there is becoming increasingly hard to predict: across-the-board tariffs, trade-remedy instruments, new technical standards and economic-security regulations. In this context, a trade strategy cannot be designed solely around “holding onto the U.S. market”; it needs to be oriented towards diversifying partners, reducing concentration risk and making use of the new “geo-economic spaces” that are opening up.

From this angle, MERCOSUR and, more broadly, Latin America are emerging as a direction of strategic significance.

MERCOSUR and Latin America: “political leverage” opening a strategic gateway

MERCOSUR currently has four full members: Brazil, Argentina, Uruguay and Paraguay (Venezuela’s membership is suspended). With a population of roughly 295–300 million people and nominal GDP of about USD 2.7–3 trillion, it is one of the world’s major economic blocs, with substantial import demand for agricultural products, processed foods, textiles, footwear, wooden furniture and light industrial goods – sectors in which Viet Nam has clear advantages.

In recent years, economic and trade relations between Viet Nam and MERCOSUR have grown rapidly. In 2023, two-way trade between Viet Nam and the MERCOSUR bloc reached around USD 12–15 billion (depending on the calculation method), with Viet Nam mainly exporting phones, components, textiles, footwear and agro-aquatic products, and importing primarily agricultural commodities, animal-feed ingredients, minerals and energy.

In particular, political signals in the second half of 2024 and the first half of 2025 have created a “golden window” for upgrading the relationship. During the State visit of Brazilian President Luiz Inácio Lula da Silva to Viet Nam and subsequent high-level contacts, the two sides established a Strategic Partnership and agreed to accelerate the process towards a Free Trade Agreement (FTA) between Viet Nam and MERCOSUR; Brazil committed to supporting this within the bloc and regards Viet Nam as a gateway for deeper access to the Asia–Pacific region.

Another important turning point was Brazil’s formal recognition of Viet Nam as a market economy in March 2025. This move significantly reduces the risk of being subjected to trade-defence measures based on biased calculations and strengthens the confidence of the business communities on both sides.

In parallel with Brazil, Uruguay and several partners within MERCOSUR have also expressed support for an early launch of FTA negotiations between Viet Nam and MERCOSUR, considering this an important instrument for diversifying the bloc’s trade relations with Asia.

From the “U.S. shock” to a diversification strategy: implications for Viet Nam

The fact that the U.S. economy in the first half of 2025 shows both considerable resilience and new risks stemming from tariffs and policy uncertainty gives rise to three main implications for Viet Nam’s trade strategy.

First, the U.S. market should be seen as an important pillar, but one with a high degree of volatility. Exporters to the U.S. must proactively adapt to an environment of high interest rates, rising financing costs, tariff-driven inflation, new technical standards and legal barriers. This requires greater investment in compliance capacity, supply-chain risk management, and diversification of distribution channels and market-entry modes (B2B, B2C, cross-border e-commerce, etc.).

Second, the broader context of a “reconfiguration” of global supply chains – with the U.S. imposing tariffs, AI driving investment and Europe tightening green standards – is making market structures more fragmented. In that structure, Latin America and MERCOSUR are no longer just “distant markets”; they are increasingly becoming spaces of strategic competition among major powers and, at the same time, promising destinations for exporters seeking diversification. With its wide FTA network (EVFTA, CPTPP, RCEP, UKVFTA, etc.), favourable geo-economic position and experience working with major partners, Viet Nam is well-placed to serve as a “bridge” between MERCOSUR and the Asia–Pacific region.

Third, the existing “political leverage” in Latin America – reflected in Brazil’s recognition of Viet Nam’s market-economy status, the establishment of a Strategic Partnership, and support for a Viet Nam–MERCOSUR FTA – will only truly translate into economic benefits if it is reinforced by enterprises’ own capabilities. This includes early preparation on rules of origin, quality standards, distribution systems, logistics capacity and product strategies suited to Latin American consumer preferences (from design and packaging to brand story).

In the context of a “multi-coloured” U.S. economy in the first half of 2025, with both opportunities and risks, Viet Nam’s simultaneous consolidation of its presence in the U.S. market and proactive expansion of its “economic sphere of influence” into MERCOSUR and Latin America will help mitigate the adverse impacts of isolated policy shocks, enhance the resilience of the economy and create additional room for growth for Vietnamese goods and services in the medium and long term.

Việt Thành