Vietnam's Furniture Industry: Record Exports, Yet Factories Are Closing?

Official numbers look great. Industry insiders tell a different story.

Vietnam's latest official data is impressive: wood furniture exports hit a record high, and Vietnam has officially overtaken China as the top furniture supplier to the United States.

Sounds like a win. But ask the people actually working in the industry, and you may get a completely different answer.

Why does furniture always come back to wood?

In Vietnam, the furniture industry and wood processing industry are essentially the same thing. Wood furniture — bed frames, cabinets, tables, chairs, kitchen units — dominates what Vietnam exports. So when Vietnamese media talks about "ngành gỗ" (the wood sector), it covers most of what the furniture industry does.

Margins keep shrinking

Export numbers may be strong, but profit margins in Vietnam's furniture sector are getting squeezed.

Raw material price swings, rising labor costs, and US tariff pressure have all cut into earnings. Industry reports show manufacturers working hard to streamline operations and cut costs — yet margins remain thin.

For small companies that depend heavily on the US market, conditions are worse. Some have already faced shipment halts or order cancellations.

Foreign firms drive exports. Local small factories struggle.

Here's an important truth: close to half of export growth comes from foreign-invested enterprises.

But Vietnam's wood sector has an unusual structure — more than 90% of businesses are small or micro-scale, many of them family-run. These smaller operators are especially exposed to market shocks and can rarely afford the cost of regulatory compliance.

Large foreign firms have scale on their side, but they too face margin pressure from tariffs and rising costs. True winners are few.

AA Corporation chairman Nguyen Quoc Khanh put the core problem plainly: "For 25 years, Vietnam's wood industry has mainly done contract manufacturing, relying on foreign partners — and that has hurt the country's standing as a brand."

In other words, Vietnam does the hard labor and collects the processing fee, while brands and profits stay in someone else's hands.

Trump tariffs: the storm has arrived

In the second half of 2025, the US imposed tariffs on imported wood, kitchen cabinets, bathroom vanities, and upholstered furniture — with rates set to rise further in early 2026. For Vietnam, this is a serious blow. The US is Vietnam's largest export market for wood products, accounting for more than half of total exports.

The reaction was immediate. The Vietnam Timber and Forest Product Association reported: "Many companies saw order volumes drop right away. A number of buyers have already paused or delayed their orders."

EU rules: another hurdle for small factories

On top of US tariffs, there is the EU Deforestation Regulation (EUDR), which requires strict proof of timber origin for all wood products exported to the European Union.

The secretary-general of the Vietnam Timber Association warned: "If they cannot meet EU requirements, many small wood furniture factories will be at risk of closing. A lot of small businesses in Vietnam's craft villages know only how to produce. They have never paid attention to where their wood comes from."

So, is Vietnam's furniture industry doing well or not?

By official data: export records broken, second-largest furniture exporter in the world, overtook China for the top spot in the US market.

By what industry players say: orders are up but profits are not, costs rise while selling prices cannot, small factories are closing, large factories are foreign-owned, and tariff pressure is immense.

If you know someone running a furniture-related business in Vietnam, their experience is probably more honest than any industry report.