The Tet offensive which began at the end of January 1968 was the largest operation of the war in Vietnam to date. The Vietcong launched a massive attack on towns and cities throughout South Vietnam which stunned the US government and their commanders in Vietnam, especially as there was meant to be a two-day ceasefire for the Tet festival. Although the offensive was a military disaster for the Vietcong, who suffered massive casualties, it had major effects on US policy. The attacks on the south continued for many months and had the effect of dramatically changing US military and political policies towards the whole Vietnam War.
At first Tet was a great success for the North Vietnamese. In Saigon, they took over many important buildings, including the US embassy (though only for a few hours before being repulsed by US marines), many important government buildings, the presidential palace and the airfield. It took three weeks for the US and ARVN troops to remove the VC from Saigon. The largest battle of the entire war took place in Hué, which the VC held for a month. They executed over 5,000 civilians loyal to the South Vietnamese, and when the ARVN took the city they killed far more people who they thought had collaborated with the VC. By the end of the campaign Hué was almost completely destroyed. Although the Tet offensive was a military disaster for the North, with 45,000 dead and over 170,000 casualties, it turned out to be a political success because of the effects it had on US policy.
The Tet offensive had dramatic effects within the USA. President Johnson faced a major economic crisis in 1968. The dollar fell in value as the costs of the war escalated out of control. Politicians and the public were worried that the USA could not manage to finance the war for much longer. Johnson was also worried that the war was diverting resources from domestic policies and affecting his Great Society programme, which required massive spending on welfare reforms and help for the poorest people in America.