What’s Vietnam’s game plan as President Trump pressures the Fed?

DNHN - In a move that rattled political circles and financial markets worldwide, U.S. President Donald Trump declared he would sue Federal Reserve Chairman Jerome Powell for “stifling growth” with high interest rates.

While legal experts in the United States debated the feasibility of such a lawsuit, Wall Street shuddered and currencies across the globe reacted almost instantly. The bigger question for Vietnam: Does this matter to us? The answer is an unequivocal yes, and more than that, it is a call for action at the highest national level.

Trump and the “Psychological Play” with the Fed

Legally, suing the Fed is improbable. The Federal Reserve is an independent institution under U.S. law. But at its core, this is a classic psychological tactic: leveraging media pressure to influence market expectations, a method Trump has deployed with striking effect in both business and politics.

“Trump is not just a president; he is a strategist in market psychology,” the analyst notes. Agree or not, it’s hard to deny his exceptional ability to read market sentiment. For Vietnam, understanding such strategies can provide valuable insight into anticipating global financial volatility and building effective policy responses.

The Opportunity–Risk–Adaptation Triangle if the Fed cuts rates

If the Fed lowers interest rates, Vietnam will face three interlinked forces: opportunities, risks, and the need to adapt.

Surge in Capital Flows to Emerging Markets
Lower U.S. interest rates typically push global capital toward high-growth emerging markets, such as Vietnam. This is an opening to attract investment into high-value sectors such as technology manufacturing, renewable energy, and strategic infrastructure. But opportunity turns into reality only if Vietnam is prepared, with robust legal frameworks, world-class logistics, and a skilled workforce.

Exchange Rate Pressure and Export Competitiveness
A weaker U.S. dollar means a relatively stronger Vietnamese dong. While this benefits imports, it hurts exports, a cornerstone of Vietnam’s GDP. This makes a flexible exchange rate policy essential to avoid market shocks and maintain the competitiveness of Vietnamese goods. This is not just monetary management; it’s a strategic imperative for trade security.

Risk of Asset Bubbles
Hot money flowing rapidly into the market can inflate real estate or stock bubbles. History warns that unchecked inflows can drive overheating followed by sharp corrections. Vietnam must strike a balance, ensuring liquidity while preventing systemic risk.

Three strategic steps Vietnam must have ready

Step 1 – Scenario Planning
Vietnam must prepare for three possible outcomes: the Fed cuts rates, holds steady, or hikes again. Each scenario requires a tailored toolkit from monetary and exchange rate measures to business support packages and targeted foreign investment policies. A ready “contingency map” will help avoid being caught off guard by global shifts.

Step 2 – Flexible Exchange Rate Management
Exchange rates are the lifeblood of an open economy. Dollar volatility can shock exports and fuel inflation. Timely adjustments are vital to protect Vietnam’s export edge, maintain macroeconomic stability, and reinforce market confidence.

Step 3 – Tight Capital Flow Management
Foreign inflows are an opportunity but without direction, they can destabilize markets. Vietnam needs cross-agency monitoring to spot risks early, while steering funds into high-value, long-term sectors like high tech, renewable energy, and manufacturing infrastructure. This is how capital becomes a growth engine rather than a source of instability.

From Washington to Hanoi: Proactivity defines position

This is more than a spat between the White House and the Fed; it’s a signal that U.S. monetary policy is becoming less predictable and more politically influenced. Vietnam must remain calm, act on data, and resist being drawn into market-driven emotion.

A single statement from Washington can jolt the exchange rate in Hanoi. Strategic foresight, data-driven analysis, and decisive execution will determine Vietnam’s position, not only in navigating short-term turbulence but in solidifying its stature on the global economic stage.

Dr. Nguyễn Thúy Lan