Vietnam-UK Trade Hits £10.5 Billion as Focus Shifts to Higher-Value Exports

Bilateral commerce between Vietnam and the United Kingdom expanded significantly in 2025, buoyed by tariff preferences under the UK-Vietnam Free Trade Agreement (UKVFTA), robust demand for Vietnamese products, and wider shifts in global supply chains. A factsheet released on May 14 by the UK Department for Business and Trade reported that total two-way trade in goods and services reached £10.5 billion ($13.5 billion), a 26.5 per cent increase from 2024. UK exports to Vietnam were valued at £1.8 billion ($2.3 billion), while Vietnam’s exports to the UK climbed to £8.7 billion ($11.2 billion).

The data also revealed important shifts in the composition of trade. Merchandise continued to form the bulk of the exchange, representing 65.6 per cent of UK exports to Vietnam and 94.8 per cent of Vietnam’s exports to the UK. The latter category saw particularly strong growth in electronics and manufacturing, including telecoms and sound equipment, office machinery, footwear, and clothing.

However, officials and trade specialists caution that for Vietnam to sustain this momentum, its businesses must evolve beyond low-cost exports. Future success will increasingly depend on meeting stricter standards, improving traceability, and building long-term competitiveness.

Changing Dynamics

The release of the UK trade figures coincides with efforts by Vietnamese authorities to deepen commercial ties with the market. At a recent seminar in Hanoi titled “Opportunities and Challenges for Market Development in the UK,” officials stressed that while substantial growth potential remains, the approach Vietnamese firms take must adapt.

Mr. Le Hoang Tai, Deputy Director of the Trade Promotion Agency under the Ministry of Industry and Trade, told attendees that economic and trade relations are developing positively, built upon the foundation of the two nations’ Comprehensive Strategic Partnership.

Citing Vietnam Customs data, officials at the seminar noted that bilateral trade reached approximately $9.38 billion in 2025, an 11.3 per cent rise over 2024. Within this total, Vietnam’s exports to the UK were recorded at around $8.39 billion, against imports of $991 million. The trend continued into the first quarter of 2026, with two-way trade reaching approximately $2.36 billion.

“The trade structure between the two countries remains highly complementary,” Mr. Tai said, highlighting Vietnam’s key exports like garments, footwear, electronic components, and agricultural products, which are exchanged for UK goods such as pharmaceuticals and industrial materials.

He emphasized that the UKVFTA remains a critical platform for enhancing the competitiveness of Vietnamese goods through tariff reductions and trade facilitation. Nevertheless, he warned that businesses could no longer depend on conventional export strategies.

Mr. Vu Viet Thanh, a Senior Specialist for the UK market at the Ministry’s Department of Foreign Market Development, observed that the UK has been redefining its international role in the years following Brexit and the Covid-19 pandemic, particularly in trade, supply chains, the digital economy, and green development.

“The UK is not a high-growth market, but it is a market with large scale, strong purchasing power, and strong financial capacity,” Mr. Thanh said. “It is not only an import market for consumer goods, but also a center for services, finance, standards, technology, and distribution.”

This reality, he argued, means Vietnamese companies should view UK market entry as “not only a matter of selling products, but also of meeting standards, building stable supply capabilities, and increasing product value.”

Mr. Thanh added that the UK market presents two parallel layers of demand. It is a highly industrialized economy requiring machinery, pharmaceuticals, and technology, while also being a developed consumer market with consistent demand for goods like garments, footwear, furniture, seafood, and coffee.

Vietnam’s export profile increasingly reflects this diversity. According to data shared at the seminar, the country’s exports to the UK in 2025 included approximately $1.35 billion in phones and components, $1.3 billion in computers and electronics, over $1.05 billion in footwear, and nearly $895 million in garments.

The UK factsheet corroborates this trend, showing that telecoms and sound equipment constituted the largest share of UK imports from Vietnam at £2.9 billion ($3.9 billion), or 34.9 per cent of total goods imports in 2025. This indicates a structural shift in Vietnam’s exports away from a sole focus on traditional labor-intensive sectors toward higher-value industrial production integrated into global supply chains.

Despite favorable market access under the UKVFTA and the UK’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), experts warned that tariff preferences alone do not guarantee competitiveness.

Mr. Le Dinh Ba, Trade Counselor and Head of the Vietnam Trade Office in the UK, noted that the UK is a fiercely competitive market where Vietnamese products face rivals from China, India, and fellow ASEAN nations. He identified rules of origin as a significant bottleneck for exporters.

Mr. Ba also advised businesses against focusing solely on freight-on-board (FOB) prices. Instead, they must calculate the total cost of reaching the end consumer, which includes transportation, insurance, warehousing, certification, packaging, marketing, and exchange-rate risk. For food and agricultural products, strict adherence to sanitary and phytosanitary (SPS) measures and the UK’s evolving border controls is critical.

He recommended that firms standardize products and documentation before securing orders, transition from contract manufacturing to building their own brands, effectively utilize rules of origin under trade agreements, manage compliance costs, and invest in a long-term market presence.

Broader Cooperation

Bilateral cooperation is also expanding beyond merchandise trade into higher value-added sectors. According to Mr. Thanh, the UK possesses significant strengths in finance, energy, pharmaceuticals, aviation, education, and green growth—areas where Vietnam’s demand is rising as it modernizes its economy.

Frameworks such as the UKVFTA, CPTPP, the Vietnam-UK Joint Economic and Trade Committee (JETCO), and the upgraded Comprehensive Strategic Partnership are expected to foster greater collaboration in services, investment, clean energy, and technology.

In line with these efforts, the Trade Promotion Agency announced it will lead a delegation to the UK from July 5-14, with stops in Manchester, London, and Edinburgh, to coincide with major exhibitions like the Manchester Furniture Show and Source Fashion.

Ultimately, speakers at the Hanoi seminar agreed that the UK market is unlikely to reward short-term, price-driven strategies. Success will be determined by the ability of Vietnamese businesses to adapt to exacting standards, ensure supply stability, build trust with partners, and position their products for long-term value creation.