President Donald Trump’s withdrawal from a Pacific Rim trade deal was viewed as a glancing blow by Vietnam’s Phu Tai Corp., which makes furniture for Wal-Mart outlets. The knockout punch may come if he follows through on threats of protectionism. From a possible border tax to higher tariffs, America’s push to reset trade relations is putting Vietnam’s small economy at risk. Phu Tai, based in a central province, relies on the U.S. for 40 percent of sales, and some business may evaporate if its dining-room sets and outdoor chairs become too expensive. “If protectionism rises in the U.S., it will hurt countries like Vietnam that rely on exports,” said Nguyen Sy Hoe, the company’s deputy general director. “The government needs to help companies.” Vietnam sells a fifth of its exports to the U.S., making it one of the few Asian nations counting America as a bigger market for their goods than China. Yet Vietnam’s $32 billion trade surplus with the U.S. puts it in the crosshairs of the White House after Trump ordered a study to identify any “trade abuse” fueling American deficits. Trump also professed support for a border adjustment tariff to encourage production of goods in the U.S. and reduce incentives for companies to move overseas. Higher taxes on U.S. importers would reduce Vietnam’s gross domestic product by almost 0.9 percent, the most negative effect on any Asian country, Credit Suisse Group AG economists Santitarn Sathirathai and Michael Wan said in a January report. “If the U.S. creates a new wave of protectionism, Vietnam will be very vulnerable,” said Alexander Vuving, a Vietnam political analyst at the Asia-Pacific Center for Security Studies in Hawaii. The U.S. will investigate countries running the biggest bilateral trade deficits to assess the extent they’re caused by “cheating or inappropriate behavior,” U.S. Commerce Secretary Wilbur Ross said. That tone is triggering alarm in Hanoi. Prime Minister Nguyen Xuan Phuc told his cabinet that U.S. protectionist policies could hurt the economy and lead to a slowdown in exports and foreign investment. Samsung, Intel The rhetoric comes at an inopportune time for a nation where foreign technology titans Samsung Electronics Co., Intel Corp. and LG Display Co. have set up shop. Companies relocated factories to Vietnam from China in recent years because of the latter’s rising costs and shrinking labor force. Since introducing market-oriented “doi moi” changes in the 1980s, Vietnam has increasingly tethered itself to global trade, helping transform an agrarian economy into a manufacturing hub of everything from shoes to smartphones. Exports surged to a record $177 billion last year, with U.S. customers accounting for about $42 billion of that—more than double compared to five years ago. Mobile phones and parts make up the biggest segment at about 27 percent. The most-recent GDP figures show how trade-dependent Vietnam has become. Samsung’s decision to scrap production of the fire-prone Galaxy Note 7 smartphone last year spurred an 11 percent decline in shipments of phones and parts during the first quarter, the national statistics office said. That played a role in curbing growth of gross domestic product to just 5.1 percent from a year earlier, compared with the 6.25 percent median estimate of economists surveyed by Bloomberg. Phuc called the slower rate “very worrisome” and asked ministries to find “suitable solutions,” according to an April 3 posting on the government’s website. The government is targeting 6.7 percent growth this year. Just the threat of American trade barriers is denting exports for some homegrown manufacturers. Thanh Hoa-based Delta Sport Joint-Stock Co. saw a 20 percent drop in U.S. orders for its sportswear during the first quarter, Chief Executive Officer Nguyen Trong Thau said. Wal-Mart, Mizuno Last year, shipments to the U.S. represented about 40 percent of its exports, or the equivalent of $30 million in revenue. Customers include Wal-Mart Stores Inc. and Mizuno Corp., according to its website. “Some of our American retailer clients are concerned about some uncertainty in the policies of the new administration,” Thau said. “We’re a bit worried about the outlook of our exports to the U.S.” The Trans-Pacific Partnership would have benefited Vietnam by reducing or, in some cases, eliminating U.S. import tariffs. Without U.S. participation, Vietnam is pivoting toward Plan B. Government officials vowed to push through structural changes to the economy required under the deal, including reforming state-owned enterprises and strengthening enforcement of intellectual-property protections. They’re also pushing sectors such as agriculture and manufacturing to improve efficiency and product quality. The science and technology ministry recently organized a business trip to the U.S. for Vietnamese companies to meet prospective clients, and the government is helping market their goods. Bilateral Deals “In the current environment, it’s crucial for us to improve our competitiveness,” said Tran Viet Thanh, the deputy minister of science and technologies. Hanoi may explore ways to keep TPP alive even without U.S. participation, said Michael Michalak, regional managing director of the U.S.-Asean Business Council and former U.S. ambassador to Vietnam. One alternative would be bilateral or small-group deals with neighbors or Latin American countries on the basis of the earlier negotiations, he said. “I don’t think they want to see those six years go to waste,” he said. “There are opportunities there to build on.” That’s what furniture supplier Phu Tai is trying to do. It’s spending about 140 billion dong ($6.2 million) to build a factory in coastal Binh Dinh province to boost capacity and cut out the middlemen it uses for Wal-Mart, Hoe said. Shares rose the most in a week Friday. “That will help us save a lot more in costs,” he said. “We must be more competitive to cope with what protectionism may bring about.”