Purpose – This study employs the Computable General Equilibrium (CGE) approach to examine how the European − Vietnam Free Trade Agreement (EVFTA) impacts on the Vietnamese economy in the case of the removal of industrial tariffs. Design/methodology/approach – The authors constructing a Social Accounting Matrix (SAM) based on the latest data of the Vietnam Input − Output Table for the year 2012 and then applying the CGE model to simulates the economic scenario when the tariff rate of the industrial sector reduces to 0%. Findings – The first simulation results demonstrate that the elimination of tariffs in the industrial sector will lead to a 9.13% increase in household consumption, together with an increase in the factors of production of the agricultural, industrial and service sectors by 9.61%, 9.74%, and 8.21%, respectively. The EVFTA also causes a deficit in the trade balance because the value of imports increase by 12.54% while exports’ value slightly increase by 2.71%. Furthermore, there has been a drop of 2.29% in the total government income; nevertheless, social welfare witnesses a gain of 9.13%. The second scenario simulation draws crucial attention to policymakers that a small fluctuation in the production tax rate will cause a significant change in the economy. Practical implications – The reduction of the tariff in industrial sector will increase the social welfare and strengthen the whole economy regarding the growth of household consumption, factors of production, and trade value. On the unfavorable side, the EVFTA causes a national budget deficit and puts pressure on domestic production. This paper is a valuable reference for governments and policymakers when they decide to reduce tariffs or adjust production taxes once Vietnam integrates into the world economy. Originality/value – This study differs from previous researches by utilizing static CGE model to investigate the impact of removing industrial tariff on the economy under EVFTA.